Is Tesla Close to Bankruptcy?
Elon Musk cracked an April 1st joke on his investors. He first claimed that Tesla had gone completely bankrupt. Later, he revealed that the company was still healthy and this was only an April fool’s joke. There are many investors and critics in the world who believe that this April fool’s joke may soon become […]
Pros and Cons of Scalable Business Models
Scalable business models are the latest buzzword in entrepreneurial circles all across the world. Most new-age founders aspire to make their businesses more scalable. However, scalability has to be built into a business before it actually exists. It is for this reason, that the decision to scale or not becomes strategic and something that founders […]
Three Dimensional Pscychographic Model
Psychographic models have evolved over the ages. They first began with the Bernwall model, which was a one-dimensional model. It later evolved into the BBK model, which was a two-dimensional model. Finally, in recent times, three-dimensional psychographic models have been developed. In this article, we will have a closer look at the three-dimensional model as […]
The Mega Scam in the Indian Banking System
Indian banking sector is divided into two. There are public sector banks, and then there are private sector banks. The public sector banks, i.e., banks owned by the government are known as bureaucratic organizations where inefficiency is rampant. However, these banks are also known to be prone to corruption. This is because executives at state-owned […]
Red Flags that Investors Need to Look out for in Term Sheet
First-time investors are quite anxious to raise funding for their projects. The fact that professional investors are looking to invest in their projects can be quite overwhelming for some founders. As a result, it is common for these founders to believe that the investors are acting in good faith. Often, this means that the investors […]
The American energy sector has really taken off in the past few years.
The discovery of “fracking” or hydraulic fracturing has completely changed the dynamics of the oil and gas industry. The end result has been a historic boom in the oil and gas industry.
For the first time in many decades, America has become self-sufficient in the production of oil. Also, countries like Saudi Arabia are no longer able to dominate America since America is no longer dependent on these nations for its oil import.
At the present moment, America produces more than 10 million barrels of oil per day. It is expected to overtake the production of Russia and become the largest producer of oil in the world.
Up until now, the Trump presidency was a godsend for the oil and gas industry. This industry has always been highly regulated because of the huge environmental impact that it has. However, of late, Donald Trump made the United States exit the Paris Accord. As a result, a lot of regulations that earlier applied to the oil and gas industry no longer apply. Fewer regulations mean less cost. It is this less cost that has made the United States more competitive in the international market.
The oil producing and exploring nations have been put in jeopardy ever since Donald Trump exited the Paris Accord. There are many critics who suggest that the steel and aluminum lobby was funded by the Gulf States to induce Trump to impose duties on foreign made steel and aluminum.
Clearly, the American steel and aluminum industry is the direct beneficiary of this action. However, the Gulf States are the real beneficiaries even though their benefits are not visible to the average person.
It is difficult to believe that Donald Trump would want to hurt the oil and gas industry knowingly. Oil and gas sector have always been on his mental map to “Make America Great Again”. Hence, he seems to have inadvertently placed a huge roadblock on the path of the oil industry.
Hence, the livelihood of millions of Americans who work in the oil and gas sector is at risk because of the tariffs on imported steel and aluminum. Donald Trump’s actions will end up creating few jobs in the steel industry.
However, they are likely to lead to massive layoffs in the oil and gas sector. These policies are just disturbing the balance of free trade. The basic principle of free trade is that countries should produce whatever they can produce most effectively. It seems like America is not very effective in the production of steel. However, the government is trying to force consumers to buy American steel. This is disturbing the cost structure of many industries.
Oil is used for transportation of all goods in general. Hence, a rise in the price of oil will lead to a rise in the price of all goods. Donald Trump’s actions may end up inadvertently causing price inflation in the economy. This is the reason why people from the oil and gas lobby are trying to convince Donald Trump to repeal his tariffs or change their nature. The very existence of American oil and gas industry can be threatened as a result of these tariffs.
America would need more time to prepare itself for a trade war. At the present moment, it is likely that American oil and gas industry may be derailed from its path. Had it been allowed to continue on its path, it would have certainly become the largest producer of oil in the world by 2021.
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