SDO's second shot

After a year's delay, Save Domestic Oil (SDO) expects the US Department of Commerce to fully consider its complaint that four other nations "dumped" oil on the US market in 1998-99.

After a year's delay, Save Domestic Oil (SDO) expects the US Department of Commerce to fully consider its complaint that four other nations "dumped" oil on the US market in 1998-99.

The US Court of International Trade, New York City, recently ruled that Commerce must consider the SDO petition, which it had rejected in August 1999 (OGJ, Oct. 2, 2000, p. 42).

SDO-representing a group of independent oil producers-had alleged that Saudi Arabia, Venezuela, Mexico, and Iraq had sold crude at unfair prices in late 1998 and early 1999.

The four nations provided more than half of US oil imports during that period. US oil prices plunged to about $10/bbl, driving some small producers out of business.

The US Department of Energy and larger producers opposed the SDO petition. They argued low prices were caused by the forces of supply and demand in international markets and not unfair pricing by a handful of oil producing countries.

What next

The ruling by Judge Thomas Aquilino Jr. remands the case to the Commerce Department.

He ordered Commerce to determine by Nov. 19 whether SDO represents enough US oil producers for the case to have standing.

Charles Verrill, an attorney with the law firm of Wiley, Rein, and Fielding, Washington, DC, represented SDO in the case.

He said Commerce will have to perform several analyses to determine the extent of oil industry support for the SDO petition.

Verrill said, "The first time around, they decided that the petitioner (SDO) did not have standing on the grounds that more than half of the industry was opposed to going forward with the case. They will have to decide anew whether to let the integrated companies have a voice in this issue."

Judge Aquilino said Commerce should not have considered the opposition of larger oil companies, nor that of Venezuela and Mexico.

Moot question?

Verrill said, "If Commerce decides we have standing after all, then the question will be whether the oil industry was injured by the imports.

"If the International Trade Commission, which has that responsibility, determines there was injury, then the Commerce Department has another 5 months to complete a preliminary investigation regarding the dumping claim and whether there were subsidies.

"All we (can) get under the dumping law is a finding by the government that selling below a certain price causes injury. Then the government can impose duties sufficient to bring the price up to its normal value."

Verrill said, "Its now pretty clear that the bottom line that controls oil prices is not the market price but the decision by the exporting countries-including the four we have targeted-on how much they want to manipulate the market."

Ironically, with prices around $30/bbl, Commerce would not impose countervailing duties unless they fell significantly.

Continental Resources Inc., Enid, Okla., was the principal independent behind the SDO effort.

Sue Hamm, Continental's manager of crude oil marketing, said "At this point, the whole purpose of this is just to protect us the next time around."

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