Two emerging factors could negatively impact day rates in the future. The first is the imposition of import tariffs by President Trump. This particularly applies to China, which ships some $50 billion worth of goods to the U.S. each year.

In response to the Trump announcement, China quickly announced plans to impose tariffs on $3 billion in U.S. imported goods. As a result, the U.S. stock market was punished and Asian markets opened lower the next day. The tariff issue hits as the U.S. prepares to use its growing unconventional oil and gas assets to increase exports of hydrocarbons and hydrocarbon products. The U.S. Department of Energy’s Energy Information Administration estimates that China’s demand for natural gas over the next few decades will grow faster than any other worldwide, to about 57 billion cu. ft. per day by 2040. China’s limited supply cannot meet the demand. Analysts fear that rising tensions over trade could lead China to buy most of its natural gas (and nearly 300,000 bbls of oil per day) from U.S. competitors, cutting revenue for the oil and gas industry and further extending the time it takes the industry to recover from the downturn.

The second factor is the growing move toward alternative sources of energy. That is the message that Shell recently put out under its “SKY” scenario. The scenario is somewhat supported by Shell’s recent investments, including its purchase of Dutch-based NewMotion, an electric vehicle recharging company. While the vision is very long term (stretching to 2070) and the company is hedging its bets by acknowledging that the world will need to keep burning fossil fuels even if renewable energy catapults forward, the idea is not limited to Shell. It is embraced, to some extent, by a number of oil and gas producers, many of whom predict a switch to renewables over a far shorter period than Shell.

These external, publicly driven factors could have dramatic, damaging consequences for U.S. oil and gas prices and markets. As a result, it could negatively affect offshore service vessel market day rates. It may take a while but it is worth watching.