ADVERTISEMENT
US President’s border tax would make gas far more expensive
Trump said that he would impose a significant "border tax" on companies that move production outside of the US.
Petra Němcová and Pierre Andurand
" investment outlook from Andurand Capital Management, a $1.6 billion hedge fund firm. "Such a tax would also increase domestic gasoline prices in the US."
A copy of the January 16 note was reviewed by Business Insider.
Trump said January 23 that he would impose a significant "border tax" on companies that move production outside of the US to other countries. America’s oil giants have production facilities around the world, and could be impacted by such a tax.
ADVERTISEMENT
London-based Andurand Capital Management is run by Pierre Andurand, and was up 22.2% last year compared to the 16.9% return of the S&P GSCI Crude index, according to the note. In December, Andurand's fund gained 6.8% net of fees, owing largely to a long position in crude oil (long Brent, WTI future and call options), the note said.
Here's the relevant excerpt from Andurand's outlook (emphasis added):
"We believe that OPEC would like to achieve higher oil prices quickly to counteract the potential cross border tax adjustment supported by President elect Donald Trump. However, if OPEC succeeds in propping oil prices up towards $70/bbl, President Trump might face resistance from US gasoline consumers and drop the tax adjustment (at least for the energy sector).
"We continue to monitor macro-economic developments around the world. We currently do not see strong downside risks to our current bullish outlook on oil prices. Recent reports suggest rising concerns with the US Dollar strengthening and its potential negative impact on commodities. Although there may be some correlation, this is very different than causality.
"On the demand side, the start of fiscal policies should be net positive for US oil demand growth and should offset slightly lower non US demand growth caused by a stronger US dollar. In fact, we would tend to be more constructive on demand growth given data points to systematic upward revisions from key agencies over the last few years."
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.ng
ADVERTISEMENT