Plains All American Pipeline LP intends to start charging users of a new oil pipeline in Texas an additional fee of US$0.05 per barrel next April. In a regulatory filing, it said it was taking this step because changes in U.S. trade policy were driving up the cost of building the Cactus II link.
Plains is the first U.S. company to pass the cost of the steel tariff on to its customers, but it may not be the last to do so. Industry analysts told Reuters that Kinder Morgan and EPIC Midstream might take similar action with respect to the pipelines they have built to pump crude oil from the Permian Basin to the Texas Gulf Coast.
“There’s certainly a risk of them passing on inflationary costs,” according to Kendrick Rhea, an analyst for the pipeline research consultancy East Daley Capital.