2of 8Pipeline to be used for natural gas is piled in a field near Ft. Stockton, Texas, on Wednesday, Sept. 30, 2015.Photo: Billy Calzada, Staff / San Antonio Express-News

3of 8A crew works Tuesday August 30, 2016 on the new 42-inch natural gas pipeline being installed near Alpine, Texas. This portion of the pipeline is near the community of Sunny Glen just west of Alpine. The pipeline starts at the town of Coyanosa and will extend a total of 148 miles and end just 12 miles upriver from Presideo, Texas.Photo: John Davenport, Staff / San Antonio Express-News

4of 8President Donald Trump holds up a memorandum on imported steel and aluminum after signing it, in Washington, April 27, 2017. Alcoa, the 130-year-old aluminum producer, said that the Trump administrations aluminum tariffs, imposed at the beginning of June 2018, were adding to its costs.Photo: STEPHEN CROWLEY, STF / NYT

6of 8*** BESTPIX *** WASHINGTON, DC - JULY 19: Auto workers rally against U.S. President Donald Trump's proposed tariffs on auto imports and the impact on auto makers and their surrounding communities, during a news conference on Capitol Hill, on July 19, 2018 in Washington, DC. (Photo by Mark Wilson/Getty Images)Photo: Mark Wilson, Staff

7of 8In this Friday, July 13, 2018 photo, a worker lifts steel tubing to be shipped out from Metals 2 Go at their plant in Waco, Texas. As Trump's trade war plays out on the world stage, local small businesses are feeling the pinch and looking for strategies to ride out the storm. (Rod Aydelotte/Waco Tribune-Herald via AP)Photo: Rod Aydelotte, MBO / Associated Press

8of 8In this Friday, July 13, 2018 photo, a worker lifts steel tubing to be shipped out from Metals 2 Go at their plant in Waco, Texas. As Trump's trade war plays out on the world stage, local small businesses are feeling the pinch and looking for strategies to ride out the storm. (Rod Aydelotte/Waco Tribune-Herald via AP)Photo: Rod Aydelotte, MBO / Associated Press

Only two barriers stand in the way of Texas’ continued growth: a labor shortage and President Donald Trump’s tariffs on imported steel.

The energy industry needs steel as it sets new records for oil and gas production. It needs pipe to drill wells in the Permian Basin and Eagle Ford Shale and pipe to carry the crude oil, natural gas and other products to Gulf Coast markets. Trump’s tariffs on imported steel put this productive piece of the American energy renaissance in limbo.

Last month, producers drilled 1,436 new wells across the country, with the Permian and the Eagle Ford leading the way, according to the Energy Information Administration. Each well goes thousands of feet into the ground and then stretches horizontally through shale rock for a mile or more, requiring tons of steel.

Production in the Permian is exceeding pipeline capacity. Oil companies are trying to track down rail cars and tanker trucks to haul their crude, but the lack of takeaway capacity is suppressing prices and discouraging new investment and economic growth.

“Crude oil pipelines out of the Permian are filled to capacity,” wrote Taylor Robinson, a pipeline industry analyst at RBN Energy. “Even wads of cash may not be enough to quickly round up the hundreds — thousands? — of trucks and drivers that would be required to make a significant dent in the Permian’s takeaway shortfall.”

The industry needs thousands of miles of new, pipelines, but the Trump administration has made affordable steel challenging to find by capping imports from South Korea, the industry’s biggest supplier, and slapping a 25 percent tariff on other imports.

Gov. Greg Abbott wrote Trump last month asking him to exclude oil pipe.

“If the new tariffs continue to drive up the cost of oil and gas production,” he wrote, “America’s quest for global energy dominance could be significantly hindered.”

Last week, though, the Trump administration denied an exclusion request from Plains All American, which is building a $1.1 billion, 526-mile pipeline from the Permian Basin to Corpus Christi. Executives said the 26-inch pipe specified was unavailable from U.S. manufacturers.

Berg Steel Pipe Corp. in Florida opposed the exclusion, saying it could supply a similar product made with a different process. The Commerce Department sided with Berg and said Plains would have to pay the tariff if it imported the Greek steel it had purchased before the tariffs were imposed.

The Commerce Department reports that of 26,400 exemption requests submitted, it has approved 267, denied 452 and rejected 3,385 requests for being improperly completed.

"The administration's arbitrary process to determine these exclusions lacks transparency as it's not clear how and why certain exclusion petitions are granted or denied," said Kyle Isakower, vice president for regulatory and economic policy at the American Petroleum Institute, the industry’s main lobbying arm. "What is clear, though, is that implementation of tariffs on imported steel undermines domestic energy production."

The Commerce Department says it will grant exclusions if there is insufficient domestic supply or the tariff would create a national security issue. But those are standards are subjective, and steel prices are on the rise.

“Prices since the start of the year are up 40.4 percent for hot-rolled coil (a steel industry benchmark),” Michael Fitzgerald, a steel industry analyst with S&P Global Platts, said. “I don’t think you can attribute the prices increase to just tariffs, and you can’t attribute them to just demand.”

The higher prices are pinching the oil and gas industry, which is still recovering from the 2014 oil bust and still faces historically low prices, said Paul Sorenson, co-owner of Tube Supply Co., a supplier to oilfield services companies.

“We’re buying as much as we can in the United States, but our business model takes us from France to Italy, Germany, Mexico, Argentina,” he said. “For our products, they are not dumping them … we are forced to buy them because we can’t find them in the United States.”

Chris Tomlinson has written commentary on business, energy and economics for the Houston Chronicle since 2014. Before joining the Chronicle, he spent 20 years with The Associated Press reporting on politics, conflicts and economics from more than 30 countries in Africa, the Middle East and Europe. He’s also the author of the New York Times bestseller Tomlinson Hill, and he produced the award-winning documentary film by the same name. Both examine the history and consequences of race, politics and economics in Texas.