Tariff Stability Needed For Projects To Move Ahead

Tariffs are a hidden energy policy – difficult to predict and hitting the oil and gas industry in unexpected ways.

Public debate on US energy policy is typically focused on fuel choices: oil, gas or renewables. Yet, it's not just the fuel choice that matters. Too little attention is paid to the infrastructure that moves, processes and stores energy.

Pipelines, wiring, pump stations, tank farms, compressor stations and storage facilities form the backbone of our energy system. Infrastructure projects are capital‑intensive and require years of planning, engineering and permitting. They also depend on a complex global supply chain that delivers high‑grade steels, copper wiring, precision valves, control systems and compressor drives that are often sourced from Europe, Asia or Canada.

Many of these components have no practical domestic substitute. Until US manufacturing capacity catches up, America must continue to import them and absorb the higher costs when tariffs are imposed or changed.

Volatile Tariffs and Supply Chain Shock

The Trump administration's tariff policies – from steel and aluminum duties that have jumped from 25 to 50 percent under Section 232 to reciprocal tariffs that have been applied globally and challenged legally – have introduced significant volatility into energy supply chains.

Each new announcement or retaliation sends shockwaves through procurement channels. Contractors report they can no longer lock in prices for more than a few weeks. Some vendors will not even quote prices without a signed purchase order, forcing developers to choose between committing capital years early or risking major cost escalation.

This environment is forcing oil and gas producers to delay or reconfigure projects simply because they cannot accurately forecast costs. Tariffs are no longer seen as a one‑time adjustment but as an ongoing risk factor that must be built into financial models and contingency budgets. For projects already facing long lead times, this uncertainty erodes confidence and deters investment.

The effect on project economics is dramatic. Tariff rates that continue to jump unpredictably can add hundreds of dollars per ton to critical materials. These shocks ripple across the supply chain, lengthening lead times and slowing development. The result is fewer projects reaching a final investment decision and a slower build‑out of the infrastructure needed to support US energy growth.

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