Earlier today, China announced tariff hikes on $75 billion worth of U.S. products as a retaliatory measure against President Trump’s latest tariff message. China has decided to apply tariffs ranging from 5% to 10% on the $75 billion worth of products in two rounds. The first round of tariffs will take effect on September 1, while the second round will commence on December 15. The state council released a statement saying, “In response to the measures by the U.S., China was forced to take countermeasures. The Chinese hopes that the U.S. will continue to follow the consensus of the Osaka meeting, return to the correct track of consultation and resolve differences, and work hard with China to end the goal of ending economic and trade frictions.” The stock market and bond yields fell sharply this morning following the announcement.
In 2018, the United States petroleum production increased 16% while simultaneously increasing natural gas production by 12%. According to the Energy Information Administration (EIA), “these totals combined established a new production record.” The United States has been the largest producer of natural gas since it passed Russia in 2011, and last year the U.S. surpassed Saudi Arabia to become the largest producer of petroleum. All signs indicate that the U.S. will continue to expand their production prominence, and over the next decade, the U.S. is set to account for 61% of all new global oil and gas production, nearly nine times the amount of Canada who projects to be second on the production increase list.
Philadelphia Energy Solutions (PES) announced the closing of their doors a couple of weeks ago, but there was, and still is, a lot of uncertainty for what that means for the future of the union workers and the physical plant itself. PES recently announced its commitment to extend pay for union workers through August 25th, according to StateImpact Pennsylvania. U.S. Senator Bob Casey and PES representatives have confirmed that PES will pay its workers through the expiration of their collective-bargaining agreement. While the unions are holding on to hope that parts of the refinery will remain open or sell to a new operator quickly, it seems increasingly unlikely that will happen.
The Environmental Protection Agency (EPA) recently approved request for an emergency fuel waiver for Allegheny County, Pennsylvania. EPA Administrator Andrew Wheeler approved the waiver on Thursday May 30, 2019, one day after receiving the request. The emergency fuel waiver was submitted after damage to the Buckeye Laurel Pipeline created a supply shortage of 7.8 psi Reid Vapor Pressure (RVP) in Allegheny County. Low RVP gasoline in Western Pennsylvania is typically supplied from refineries on the East Coast and the Laurel Pipeline disruption has effectively cutoff the supply.
Tensions in the Middle East rose again over the weekend after reports indicated that four oil vessels were “attacked” or “sabotaged” at the mouth of the Persian Gulf near Fujairah Emirate, just outside of the Strait of Hormuz. The United Arab Amirates (UAE) stated that the damaged ships were two crude oil tankers owned by Saudi Arabian shipping firm Bahri, one fuel bunker barge flying a UAE flag and Norwegian oil products tanker owned by Thome Ship management. These reports are still largely unconfirmed, but come as no surprise given the recent rhetoric and geopolitical tensions facing the region.