Commerce to appeal oil dumping case

The US Commerce Department has appealed a court order that it reconsider a case alleging four nations dumped crude on the US market in 1998-99. The petition had been filed by Save Domestic Oil, representing independent producers.


The US Commerce Department has appealed a court's order that it reconsider a case alleging four nations "dumped" crude on the US market in 1998-99.

The US Court of International Trade, New York City, ruled Commerce must reconsider the petition of Save Domestic Oil, which the department rejected in August 1999 (OGJ, Oct. 16, 2000, p. 49) on the grounds that it had insufficient industry support.

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

Late Thursday, Commerce asked the District of Columbia US Circuit Court of Appeals to issue a stay of the order, pending a formal appeal.

Meanwhile, the Petroleum Industry Research Foundation, New York City, warned the appeal could impact world and US oil markets that "are currently extraordinarily sensitive to any threat of disruption."

Pirinc said, "The mere threat of initiating preliminary investigations by the US Commerce Department regarding the alleged `dumping' and subsidization of crude oil from Venezuela, Saudi Arabia, Iraq, and Mexico in the current market environment could have large negative impacts on oil markets, consuming country economies, and U.S. interests."

Pirinc said market conditions are different from 1998-99, when the petitions were first filed.

"All the market `safety valves' have virtually disappeared. Stocks are exceptionally low and spare producing capacity is minimal with most of what spare exists is concentrated in one country, Saudi Arabia. Refineries have been operating at record levels and logistics systems are at full capacity.

"Pipelines are full and shipping is extremely tight, with tanker rates for Persian Gulf crude delivered to the US Gulf Coast up threefold from year-ago levels, from about 95�/bbl to $2.75/bbl.

"In such an environment, initiation of such an investigation, raising the possibility that within 50 to 140 days cash deposits or security bonds would have to be paid to cover proposed penalties on key world oil producers (and suppliers to the U.S. market), could cause immediate, substantial harm to US interests."

Pirinc said it is essential for the US government to maintain cooperative relationships with key producers, particularly Saudi Arabia, to facilitate a return to more normal market conditions. It noted that the US is heavily dependent on imports to meet its oil needs and that dependence is almost certain to grow.

More in Economics & Markets