This is not the kind of anti-trust investigation Larry (loudmouth) Kudlow wants. Too bad Larry!
Sunday June 27, 9:41 am Eastern Time
US oil producers to seek dumping investigation
By Tom Doggett
WASHINGTON, June 27 (Reuters) - In response to a flood of crude oil imports, independent American oil
producers will ask the U.S. government this week to investigate for the first time alleged crude oil dumping in
the U.S. by foreign suppliers.
It's unclear if the petition, to be filed as early as Monday, will be successful. The oilmen are also seeking help
from Congress in the form of a special loan program.
The oil producers group, Oklahoma-based Save Domestic Oil Inc., contends that Saudi Arabia, Mexico,
Venezuela, Kuwait, Iraq and Nigeria are selling oil to U.S. customers at prices below the cost of production.
The group wants the Commerce Department and the U.S. International Trade Commission to review the six countries' crude oil exports to the U.S. from
the second quarter of 1998 through the first quarter of this year -- just before oil prices began to rise after a prolonged slump.
U.S. oil production this year is expected to drop to 5.84 million barrels per day (bpd), the lowest level since 1950. At the same time, foreign imports have
risen to roughly 52 percent of U.S. petroleum supplies, the Energy Department reports.
U.S. oil imports from the Gulf alone were running at a record 2.47 million bpd in the first four months of 1999.
The higher imports reflect lost business for U.S. oil producers, as crude prices that dropped to $10 a barrel last year made it cheaper to buy foreign oil
than drill for it domestically.
While oil prices have now rebounded to $18 a barrel, it will take a long time for U.S. oil output to return to earlier levels because so many drilling rigs
have been shut down, said George Beranek, an oil analyst with the Petroleum Finance Co.
''(Low prices) took a toll on U.S. oil production and that is something that can't be reversed overnight,'' he said.
The targeted countries have denied the dumping allegations, arguing that because they are so dependent on oil revenue it would not make sense to dump
oil in the U.S market and fuel the decline in oil prices.
''It is completely untrue to allege we have engaged in dumping,'' Roberto Mandini, chief executive officer of Venezuela's state oil company PDVSA, said
on Friday. ''Indeed, it would be difficult for us (to) dump even if we wanted to do so, because our production costs are very low.''
Mexico oil minister Luis Tellez said last week his country will urge the U.S. government to reject the dumping charges.
If the countries were found guilty of dumping, sanctions could include slapping duties on imported crude, which would raise prices across the board. The
United States could also work out an arrangement with targeted countries to scale back their shipments.
Independent oilmen have lobbied Congress for tax relief and other measures to help offset financial losses from the dive in oil prices. Some 55,000 U.S.
oil industry workers from large and small companies lost their jobs last year because of the collapse in the oil market.
The Senate came through with help earlier this month when it approved a $500 million guarantee loan program for oil producers. However, that program
must still be cleared by the House of Representatives and signed into law by President Bill Clinton. |
