Marathon CEO says consumers will bear brunt of any border tax
Marathon Petroleum CEO Gary Heminger says refiners would pass any incremental costs associated with the proposed border tax on to consumers. Marathon photo.
Border tax could be as high as 20 per cent on imports
Feb 1 (Reuters) – Marathon Petroleum Corp’s chief executive officer said on Wednesday the company would pass along any costs incurred under a Republican-backed plan to impose a border tax on crude oil and other imports.
The border-adjusted tax being considered in Washington would eliminate corporate income taxes on U.S. exports, including crude oil and refined products, while imposing a tax as high as 20 per cent on imports.
Marathon, like other U.S. refiners, imports a significant amount of crude oil. It imports roughly 700,000 barrels per day of oil, mostly from Canada and Saudi Arabia, for its 1.6-million-b/d refining network, according to the latest figures from the U.S. Energy Information Administration.
“Refiners are going to have pass any incremental costs on to the consumer,” CEO Gary Heminger said during Wednesday’s earnings call. “I am very confident that we will be able to do that just as we did when crude prices were $100-$147.”
The border tax would directly increase the costs of imported crude, but it would pull up the prices of U.S. crude along with it, analysts say.
Gulf Coast refiners would be able to take advantage of the reduced costs of exports, but landlocked refiners in the Midwest and import-dependent refiners on the U.S. East Coast would be disproportionately hurt, Heminger said.
“Even if border adjustments were to happen, I think Marathon is in one of the best positions because of the logistics infrastructure,” Heminger said, noting the company has increased export capacity on the Gulf Coast.
(Reporting by Jarrett Renshaw in Philadelphia; Editing by Chizu Nomiyama)
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