American refiners and motorists may have dodged a bullet after the United States indefinitely suspended the threat of imposing tariffs on all imports from Mexico after reaching agreement on immigration with its southern neighbor.
A week before Friday, June 7, when the President, Donald trump declared that the tariffs, which entered into force on 10 June, was suspended indefinitely, the leaders and lobbyists of the oil industry frantically urged state officials from the White house to the Commerce Department, the Treasury will reconsider tariffs on imports of crude oil from Mexico.
Refineries on the Gulf coast heavy oil imports from Mexico for blending with lighter oil to produce gasoline and other refined petroleum products. The tariffs that President trump threatened at the end of may, would mean that American refiners will pay more for heavy oil from Mexico on the world market, which is already experiencing a shortage of heavy oil with U.S. sanctions against Iran and sanctions against Venezuela, as a result, the US imports from Latin American countries fell from 603 000 bpd for the week ending January 25, up to a total of 12 000 bpd for the week ended may 31.
Therefore, the leaders and lobbyists have been busy for weeks finding a solution or compromise and called for the release of crude oil imports from tariffs in Mexico.
Last year, imports of crude oil United States from Mexico averaged 665 000 barrels per day and accounted for most of the energy imports of the US from Mexico, according to EIA data . Mexico was the source of 9 percent of the imported U.S. crude oil, the third largest U.S. supplier of oil abroad, behind only Canada and Saudi Arabia.
Chet Thompson, President and CEO of American fuel producers and petrochemical (AFPM), said in his statement immediately after the administration of trump announced tariffs on products produced in Mexico:
“The introduction of tariffs on Mexican products, particularly crude oil, may raise energy prices for U.S. consumers, put at a disadvantage refining industry of the United States and jeopardize the adoption of the USMCA – all this bad results. We therefore urge the President not to use the electricity tariffs in respect of one of our most important trading partners.”
During the week, when tariffs on Mexican goods were on the table and was inevitable, lobbyists were busy explaining to the administration that tariffs for Mexican crude oil in a limited market for heavy oil will mean an increase in gasoline prices only in the beginning of the summer driving season. About it to Agency Reuters said a lobbyist last week.