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Government rejects complaint of unfair pricing of oil imports Kansas, Texas, Oklahoma independent oil men did not have sufficient support from rest of U.S. industry, Commerce Department says H. Josef Herbert Associated Press Writer
A trade dispute that dumbfounded many economists is coming to an end before it even really began with the government throwing out a complaint from a group of U.S. oil men that sought steep taxes on oil imports.
The Commerce Department on Aug. 9 rejected a petition from a group of U.S. Independent oil companies that charged four of the world’s leading oil producing countries with dumping cheap oil on the U.S. market contrary to American trade laws.
The department said the oil men from Kansas, Texas and Oklahoma did not demonstrate sufficient U.S. industry support to invoke U.S. anti-dumping laws that would have triggered tariffs on 60 percent of the oil imported into the United States.
A win-win says Richardson The Clinton administration, the oil producing countries involved, and some of the country’s biggest energy users immediately expressed their relief. Higher tariffs would have meant higher energy and gasoline prices, they argued.
“The denial is a win-win for U.S. consumers and domestic oil producers,” said Energy Secretary Bill Richardson, who had been frustrated by the oil men’s action. He said the petition distracted officials from helping the U.S. industry and jeopardized “important strategic relationships” with Saudi Arabia, Venezuela and Mexico.
Little guy ignored says Hamm The three countries as well as Iraq had been targeted by the petition filed last month by a group calling itself Save Domestic Oil Inc., based in Enid, Okla.
Harold Hamm, chairman of the group and an Oklahoma oil producer, reacted sharply to the Commerce decision, calling it “a classic example of government disregarding the rights of the ‘little guy’ in favor of the greedy self interests of the wealthy.”
Hamm said the group would appeal the decision to the Court of International Trade. Such appeals, however, often take several years to resolve, according to trade experts.
The group had argued their industry, especially in the historic oil patch of Texas, Oklahoma and Kansas, had been severely harmed by the low prices of imported oil and that the anti-dumping trade laws should protect them.
The petitions charged that the foreign producers sold oil in the United States in some cases for less than it cost to produce and in other cases for less than they sold it for in other markets such as Japan. They also charged that government subsidies to the government-owned oil companies violated U.S. trade laws.
Allegations won’t be investigated But the allegations won’t be investigated.
The Commerce Department, after a review by its International Trade Administration, found that the Oklahoma-based group had “insufficient industry support” to trigger a formal investigation under U.S. anti-dumping trade laws.
It said that “opposition to the petition from U.S. producers exceeded support for the petitions” and that “without adequate industry support, Commerce is prohibited by law from initiating investigations.”
The department made spot checks, direct inquiries and received comments from nearly 1,000 oil companies and producers and found that only about a third of those responding were in favor of the complaint, officials said. By law at least half of those commenting must favor a petition to trigger a full investigation.
API opposed petition The American Petroleum Institute, representing the large oil companies, vowed to fight the petition it at every step and rallied key energy users from truckers to chemical companies, against it.
The API said while there is no question that low oil prices have hurt the U.S. industry, “these low prices were set by the forces of supply and demand ... not by alleged unfair pricing by a handful of oil producing countries.”
Trade experts also were astonished that anyone would try to use of the anti-dumping trade laws on oil imports since petroleum prices and the flow of oil is subject to a worldwide market. If a foreign producer sold at below-market prices to a specific country, it would be impossible later to recoup the losses by raising prices above market levels, economists argue. Also it does not matter where the oil comes from. If an import tax is slapped on one producer by the United States, that producer will sell elsewhere while another exporter not subject to the tariff takes up the slack, they say.
Still, the U.S. anti-dumping laws have been known to strongly favor the domestic industry and economists were not sure what the outcome might have been if Commerce found cause to launch a full investigation.
The Commerce decision was “a triumph of sound economics over protectionism and the mumbo jumbo of trade legalism,” said Guy Caruso, an energy expert at the Washington-based Center for Strategic and International Studies.
Foreign producers deny charges If the petition had been accepted, the government would have opened formal investigations into whether prices on oil imports from the four countries were unfairly being manipulated, and whether those actions had harmed the U.S. industry sufficiently to trigger import tariffs.
The foreign producers deny the charges.
Petroleos de Venezuela, the national oil company of Venezuela, said the allegations “reflected a fundamental misunderstanding of the workings of the world oil market.”
Mexico particularly had expressed outrage and put on hold plans to cut tariffs on natural gas imported from the United States. Richardson said Monday that Mexican officials had informed him that they now intended to go ahead with a tariff phase out.
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