Petroleum Anti-Dumping Petition Update (7-28-99)

A group of American independent oil producers called "Save Domestic Oil" (SDO) has filed a petition with the U.S. Commerce Department alleging the dumping of oil by Iraq, Mexico, Saudi Arabia and Venezuela. The claim contends that there is a conspiracy among the oil-producing countries to drive small producers out of business. The petition seeks action under the standards of the Tariff Act of 1930, although oil has never been a product listed under the trade provisions of the Act. It must be recognized that the Tariff Act is now somewhat archaic and was developed amidst a protectionist climate; thus it tends to favor the petitioner.

Although many members of the Independent Petroleum Association of America support the action, some do not -- especially the larger and more internationally focused members. Since most of the membership believes that the SDO should be allowed to present its case, the IPAA Board of Governors has voted to file as an "interested party" to the action. IPAA stresses its role solely as an interested party for the purpose of having the question aired, and definitely does not allege any violation of law or wrongdoing,

The case is extremely controversial because a determination in favor of the petition could penalize oil companies that import crude from the named countries, as well as the countries themselves. This is particularly vexing to Mexico, Saudi Arabia and Venezuela, which have acted responsibly in recent months to abide by international agreements to reduce production and end the world-wide glut of oil that was driving down prices to record lows. A successful initial determination could also affect the transport of oil between the U.S. and the named countries.

Unless all of the involved parties and countries remain flexible and keep the issue in perspective, the tensions can result in conditions resembling the Arab Oil Embargo or worse.

Sources: IPAA, news reports

Please send any comments or requests for information to the AGI Government Affairs Program.

Contributed by AGI Government Affairs Senior Advisor John Dragonetti

Posted July 28, 1999

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