Could new tariffs and sourcing quotas that would hammer US electricity customers in Pennsylvania, Ohio and Florida be coming tomorrow?
According to a report from Reuters, that may well be the case. According to the news service:
Trump is expected to decide as soon as Friday on the petitions from Colorado-based Energy Fuels Inc (UUUU.A) and Wyoming-based Ur-Energy Inc (URG.A) – which seek quotas requiring 25% of the U.S. uranium market be sourced domestically – after reviewing recommendations from the Commerce Department in April.
Two sources familiar with the matter said the White House was weighing three options, including taking no action, delaying a decision for six months, and requiring utilities to purchase 5% of their uranium from domestic mines each year – rising 5 points per year until it reaches 25%.
As the Reuters story hints, for months now, the administration has been debating slapping Section 232 “national security” tariffs or quotas on imported uranium, at the behest of the Wyoming mining industry.
Sen. John Barrasso has been leading the charge, and insiders report that he has racked up a powerful ally in Commerce Secretary Wilbur Ross, who we are told is feeling warm and fuzzy towards the tariff/quota proposal.
However, more lukewarm on the plan is pro-tariff, anti-free-trade hawk, Peter Navarro.
And downright opposed are the US Navy and National Security Adviser John Bolton, who apparently views the tariff/quota plan as unnecessary and potentially even dangerous because of its potential effects on relationships with key allies.
As for the Navy and national security/foreign policy hawks, a key point appears to be that 2015 Department of Energy study, which stated that “new sources of fuel for naval reactors will be needed in approximately 2060.” In other words, the Navy has what it needs, and there is no capacity for Russia or any other country to hold it to ransom by withholding uranium exports.
It is unclear what is at the root of Ross’ support for the move, though critics of the plan point to his lengthy history of extensive investment in rival energy sources to nuclear, specifically oil and gas, as reflected on his personal financial disclosure form. Among the hydrocarbon companies in which he has invested are:
American Energy – Permian Basin LLC
Northern Oil and Gas
Breitburn Energy Partners
Longmen Group Limited
Tennessee Gas Pipeline
Kinder Morgan Energy Partners
Plans All American Pipeline
Magellan Midstream Partners
Were uranium prices to spike, as is the intention of the companies pursuing the tariff/quota plan, oil and gas would undoubtedly benefit as additional financial incentives would exist for power companies to switch the source of their generation from nuclear to even more natural gas.
However, opponents posit that his long-standing pattern of investing in natural gas mostly serves to predispose him to favor policy beneficial to the industry that would adversely impact its rivals, in this case nuclear.
The nuclear industry has argued to the administration that in addition to being unnecessary and even risky from a national security and foreign policy perspective, tariffs and/or quotas could hurt the President’s chances of re-election if they lead to higher energy prices in Ohio, Pennsylvania and Florida as the nuclear sector expects they would. That is because those states are particularly reliant on nuclear energy for electricity generation.