As the trade war between the United States and China continues, Texas could have a lot at stake.
Experts say if it becomes long-term, the oil and gas industry could expect some damage. China announced monday it will raise tariffs on american imports to 25% – liquified natural gas would be subject to that increase.
“The fear is that the U.S. and Chinese economies slow down, which therefore slows down the demand for oil and gas growth,” said President of Cargile Investment Management, Mickey Cargile.
Latigo Petroleum’s President and CEO, Kirk Edwards, says higher tariffs could also mean higher budgets for production. “A lot of base products come in from China to other countries. They get made into products here. That will cause the price to go up for wells that are being drilled here locally.”
However, experts say the bigger the issue is tariffs hurting everyday consumers.
“The fear is that that will become a tax on the consumer. The price of the goods will go u,p and that will take away from your discretionary spending money.”
But rest assured, Cargile and Edwards say they have not seen much evidence of an economic slowdown.
“The reality is, when we look at the stores that should be impacted the most, things like Dollar Store or Walmart, we see their sales actually growing over the last quarter,” explained Cargile. Edwards added, “Overall I think China is 2%, 3% of imports in the United States right now, so it’s an insignificant piece.”
And should this battle continue, Cargile says it would simply open up new doors for trading partners.
“That’s the real reason why China would have to eventually come to the table.”