IPAA backs petition alleging crude oil dumping

Patrick Crow
Government Policies Editor

The Independent Petroleum Association of America has voted to support a petition asking the U.S. International Trade Commission to investigate alleged dumping of crude oil in the U.S. market by Mexico, Venezuela, Iraq, and Kuwait.

Concerned about low oil prices for the past year, IPAA governors took the action during IPAA's midyear meeting in Charleston, S.C., last week.

IPAA will act as an "interested party" in the petition that Save Domestic Oil Inc. (SDO), a group of Oklahoma independents, plans to file with ITC May 28. IPAA said that status would allow it to monitor and contribute to the ITC process.

George Yates, IPAA chairman, said, "We agreed that this determination should be made and (that) IPAA should participate in the process."

IPAA's participation will give the SDO petition the necessary standing before ITC, because more independents will be involved in the case.

The petition will allege the four nations sold crude oil to U.S. importers below their actual cost of production from July 1, 1998, through Mar. 31, 1999. The petition must be filed before June 30 in order to include first quarter 1999 imports.

Unrelated to the dumping petition, the U.S. Department of Commerce has launched an inquiry under Section 232 of the Trade Expansion Act to determine how rising crude and product imports are affecting U.S. energy security (OGJ, May 10, 1999, Newsletter).

DOE efforts

U.S. Energy Sec. Bill Richardson said Commerce Sec. William Daily plans to expedite the Section 232 study and issue a report by July 26.

Meanwhile, the U.S. Department of Energy also is looking into the anti-dumping complaints.

Richardson said he would ask the National Petroleum Council, his oil industry advisory group, to complete a quick "snapshot" study of the U.S. petroleum situation.

Several associations representing U.S. producers had urged Richardson to request the analysis. They are concerned that oil imports, on the rise from 50% to 60% of U.S. consumption, will cause transportation and crude-quality problems for inland refiners.

IPAA's Yates said producers are also concerned about rising depletion rates for offshore fields, and other issues.

Richardson said DOE is continuing to negotiate with the U.S. Department of Treasury on possible tax relief for marginally economic wells.

He said, "We continue working on the possibility of marginal well tax credits and elimination of the alternative minimum tax. We're looking at geological and geophysical costs and depletion allowances, and, on all of these, we're keeping an eye on carryback allowances. These are my top priorities, and I'm fighting for them."

The secretary told independents, "I recognize things have been tough, and even though they're looking a little better, I want DOE to be in there (fighting) for you."

He said U.S. reexamination of the United Nations' oil-for-food program in Iraq is under review. Richardson told producers, "I have become more sensitive to how that affects you," since earlier this spring (OGJ, Mar. 22, 1999, p. 41).

The secretary warned, "Some potential solutions remain a hard sell in the administration and in Congress. Many (leaders) are unconvinced that the issues warrant market intervention."

Other issues

Bob Gallagher, special oil and gas advisor to Richardson, said that, if Commerce's Section 232 investigation finds that oil imports are a threat to U.S. national security-as similar inquires have twice in the past-DOE will be ready with solutions.

"We want to be prepared to put remedies on the table that can be enacted."

He said a White House task force has met several times and is working on a list of 22 options. An oil import fee is not one of them, he said.

Gallagher said that, although oil prices have been improving, DOE and industry "have to look at doing things right now to minimize the impact of the next downturn."

Bill Condit, director of the House resources committee's energy and mineral resources subcommittee, said that legislation would soon be filed to permit state oil and gas commissions to assume many Bureau of Land Management inspection and enforcement duties.

He also said that subcommittee chair Barbara Cubin (R-Wyo.) is working on a "slim, less proscriptive" bill to require the U.S. Minerals Management Service to take many royalties in-kind, rather than in cash.

Industry officials said MMS may be warming to the idea: It has been collecting about $1/bbl more under a pilot RIK program than it had expected.

IPAA plans to distribute a questionnaire to its members this month asking them to detail their biggest problems in international operations. It will offer solutions in a subsequent booklet.