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When this column is published, the inauguration of the 47th President of the United States, Donald Trump, will have taken place or will commence shortly, igniting a new era of optimism for the PVF industry.
With the GOP sweep, the Trump administration is likely to make early-term policy shifts to reverse the current administration’s pause on federal export licenses for U.S. liquid natural gas export terminal projects currently under construction or set to start. The new administration should also be more hands-off in regulating energy programs, giving more oversight to states.
President-elect Donald Trump’s choice of Chris Wright to head the Department of Energy and North Dakota Gov. Doug Burgum to serve as both interior secretary and chair of the National Energy Council reflects the administration’s focus on pushing fossil-fuel development.
Chris Wright is the CEO of Liberty Energy, a Denver-based fracking company, and a board member of Oslo, an advanced nuclear reactor developer.
Emily Skor, CEO of the biofuel trade association Growth Energy, describes Burgum as “uniquely qualified to coordinate an all-government approach to U.S. energy dominance.” North Dakota has “a thriving renewable fuel sector, growing alongside oil and gas while reducing emissions with carbon capture.”
Oil prices key for Trump administration
As of this writing, crude oil finds WTI at $68.57/barrel and Brent at $72.36/barrel. The news of key cabinet appointments in Trump 2.0 with a hawkish tariff-driven, anti-China stance is adding a bearish outlook to Brent oil futures. Also, Trump’s stance on “drill baby, drill” is in contrast to the latest shale guidance striking a cautious tone on growth.
A Rystad Energy Global analyst stated that oil’s supply-demand fundamentals may help Trump keep his promise of lower prices at the pump. This will have a cascading impact on the prices of goods and services across the entire economy.
Further tax cuts for small businesses anticipated from the 119th Congress could be a tremendous benefit to contractors and service providers, allowing them to invest in more equipment and workers. Also, an anticipated reduction in red tape and looser regulatory policies may allow projects to move more smoothly through the planning stages to execution.
U.S. manufacturing contracted moderately in November as orders increased for the first time in eight months, still below the PMI 50 threshold. The Institute for Supply Management tracked similar results showing a rise in optimism for more business-friendly policies from the Trump administration.
Energy construction projects going forward
Richard Branch, chief economist for Dodge Construction Network, sees energy policy as a positive for the construction industry: “The rapid increase in data centers and high-tech manufacturing projects may be limited by existing electrical generation capacity. The new administration’s ‘all-in’ energy policy could promote further buildout in natural gas-fired plants and nuclear facilities to meet this added demand and allow further buildout in data centers and manufacturing.”
A concern topping the list for growth is labor, as the industry is already “woefully short” of workers. “Roughly one-third of the construction labor force is foreign-born; a crackdown could result in meaningful delays in moving projects forward,” Branch notes.
Arkansas Electric Cooperative Corp. (AECC) will invest $1 billion for more than 1 gigawatt of new natural gas generation. A $850 million gas plant will be AECC’s largest generating facility outside of Arkansas, near Naples, Texas.
Additionally, AECC is investing $93 million to expand its Thomas B. Fitzhugh Generating Station from 170 megawatts (MW) to 270 MW. The plant will receive two new units and is expected to be operational by the end of 2025.
The U.S. Department of Energy (DOE) loan program office has awarded Calumet, a subsidiary of Montana Renewables, a conditional loan guarantee of up to $1.44 billion to fund an expansion of the renewable fuels manufacturing facility in Great Falls, Montana. Construction is set to start in 2025, with completion scheduled for 2028.
Rivian announced that it has won a “conditional commitment” from the DOE for a $6.6 billion loan. The loan would support the construction of Rivian’s assembly plant, currently on hold, located on a site outside Atlanta.
If finalized, the new loan would restart Rivian’s plans to develop the Georgia assembly plant.
The U.S. Commerce Department announced that it has finalized a $6.6 billion subsidy for Taiwan Semiconductor Manufacturing’s (TSMC) U.S. unit for semiconductor production in Phoenix.
TSMC has agreed to increase its planned investment by $25 billion to $65 billion and to add a third fabrication unit by 2030.
This award comes only weeks before President-elect Donald Trump, who has criticized the program, takes office.
Supply chain issues to follow
As of this writing, the International Longshoremen’s Association (ILA) has not finalized the negotiation and ratification of the tentative agreement for the U.S. East Coast and Gulf Coast, scheduled for Jan. 15, 2025.
Also, ILA on the West Coast has begun discussions regarding limiting equipment mechanization at the Ports of Long Beach and Lost Angeles.
Pricing and availability of commodity carbon steel butt-welding fittings and forged steel flanges remain stable as of this writing. Both domestic and offshore manufacturing and suppliers continue to cope with increasing labor costs, currency fluctuations, energy costs, regulatory costs, port handling charges, transportation costs and geopolitical uncertainties.
President-elect Trump’s proposed sweeping tariffs, including, but not limited to, China, India, Canada and Mexico, will also impact the supply chain of offshore PVF products. The size and specific tariff allocations (amounts could be 25% on Mexico and Canada and an additional 10% on goods from China) will influence the price and the availability of components and finished goods.
In addition, the pending (as of this writing) retaliation by Iran using more powerful warheads for Israel’s attack, Russia’s response to Biden’s authorization of long-range missile use by Ukraine, geopolitical uncertainties in the world today (the hot war in Gaza, Israel’s attacks on Hezbollah in Lebanon and Iran, the Houthi attacks in the Red Sea shipping corridor, conflicts with China/North Korea in the Pacific and the Russia-China-North Korea alliance) and the potential impact they present to the PVF supply chain give additional reason for concern.
It is, therefore, wise to remain in close contact with your manufacturer/supplier to avoid surprises regarding U.S. Tri-Seal compliance, pricing and the availability of pipe, forged flanges, butt-welding fittings, valves and other PVF-related products.
PVF Roundtable News
The woeful shortage of workers mentioned by Dodge Construction Network’s Branch resonates loudly with the PVF Roundtable (PVF RT), which passionately promotes the funding of trade schools and education programs designed for the PVF industry.
The PVF Roundtable is actively supporting trade schools and student recruitment for the industry through the PVF Roundtable Charitable Foundation — with scholarships exceeding the $2 million mark in 2024.
The funding of these programs is provided through the PVF Roundtable Charitable Foundation. The primary funding is generated by the PVF RT Annual Golf Tournament and the Annual TroutBlast, the major fundraising events for the foundation scheduled for 2025.
The Weldbend Corp., Ferguson Industrial and MRC Global are key sponsors of these events.
The next meeting of the PVF Roundtable will be the very popular Cocktails & Commerce event scheduled for Feb. 11, 2025, and will be held at the Bayou City Event Center in Houston, 281-501-6720.
Our new venue will provide additional space and convenience to exchange information and meet new colleagues. This a great opportunity to network with manufacturers, suppliers and end-users.
Networking Meetings are now, more than ever, essential for you, your associates and clients to discuss the issues, share information, discuss pertinent issues, meet new contacts, develop new long-lasting friendships and pursue new opportunities in the industry.
As a member of the board of directors, and I speak for all members, we thank you for participating in these events.