WATCHING WASHINGTON RELIEF FROM OIL IMPORTS

With Patrick Crow Although Congress and the Clinton administration are toying with ways to give the U.S. oil industry protection from increasing imports, no relief is in sight. The American Petroleum Institute reports crude oil imports averaged a record 7.922 million b/d the week ending Aug. 27, topping the previous mark of 7.902 million b/d set the week of july 16. Last week oil groups told a House ways and means subcommittee hearing on miscellaneous tax proposals they need relief from imports.

Sept. 13, 1993

3 min read

Although Congress and the Clinton administration are toying with ways to give the U.S. oil industry protection from increasing imports, no relief is in sight.

The American Petroleum Institute reports crude oil imports averaged a record 7.922 million b/d the week ending Aug. 27, topping the previous mark of 7.902 million b/d set the week of july 16.

Last week oil groups told a House ways and means subcommittee hearing on miscellaneous tax proposals they need relief from imports.

WHAT REFINERS WANT

The Independent Refiners Coalition, representing 12 companies, asked for a 7/gal tax on imported gasoline and blending components effective Jan. 1, rising 1/gal/year thereafter until it hits 13/gal Jan. 1, 2000.

Robert Campbell, Sun Co. Inc. chairman, president, and chief executive officer, said the fee would offset the advantage non-U.S. refiners have due to their lower environmental costs. He said the advantage allows them to undersell U.S. produced gasoline despite higher transportation costs for finished products vs. crude oil.

Campbell said, "The way the gasoline market operates in the U.S. is that the marginal barrel of gasoline coming into a market sets the price. Those last barrels of gasoline coming into the market are imported because we are not producing all we consume."

He added the margin of profit on a gallon of U.S. gasoline is 1/gal or less.

The Independent Petroleum Association of America said U.S. producers need an import fee to help them survive a depression that has lasted nearly 7 years.

IPAA also asked for tax credits for newly drilled wells. Gas wells would get 500/Mcf for the first 90 Mcfd and 10/Mcf for production over that. Oil wells drilled on producing leases would get $1.55/bbl for each of the first 3 b/d if they produce a yearly average of 25 b/d or less, and oil wells on other leases would get $1.55/bbl for the first 15 b/d if they produce an annual average of 25 b/d or less.

IPAA also called for stripper well tax credits: $1.55/bbl for up to 3 b/d of oil and $0.268[Mcf for up to 18 Mcfd.

Such legislation appears to have little chance. Tax credits would only worsen the government's budget problems, and Congress has repeatedly rejected an oil import fee.

OIL IMPOST RELIEF

Meanwhile, independent producers hope the administration will consider oil import relief as part of a program to help the U.S. oil industry.

IPAA said if the Clinton team does not contain "substantial recommendations to improve domestic oil production," it might ask for relief under the Trade Expansion Act. "We believe the issue of oil import dependence must be addressed directly."

Susan Tierney, assistant energy secretary for policy, planning, and program evaluation, said the policy may be released in about a month.

She stressed that an oil import fee is one of many options on the table, and no decisions have been made.