-Caveat Lector-
Iraq and Venezuela -- threat to the global oil cartel's exorbitant
profits.
Cheap Oil Imports Irk US Producers
By WALTER R. MEARS
.c The Associated Press
WASHINGTON (AP) - Back when Americans were coping with the energy crisis, the
idea that there could someday be a trade complaint against cheap oil imports
would have gotten anyone laughed out of the line at the gasoline pump.
But there's just been one, the charge by small U.S. producers that four
exporting nations dumped cut-rate oil on the market in violation of American
trade laws, depressing their prices and crippling their business.
The Commerce Department dismissed their case on Monday. By the time it was
filed, the market had turned up, after two years of plunging prices.
World prices, which slumped because of slackening demand and overflow
supplies, have been increasing. The Organization of Petroleum Exporting
Countries agreed on production curbs to push up prices. Demand is going up,
too, and the Energy Department expects higher world oil prices to hold for
the rest of this year and all of 2000.
The Paris-based International Energy Agency says the oil glut of 1998 is
yielding to tightening markets in 2000.
At the same time, U.S. oil imports are expected to increase. Twenty-five
years ago, when the Arab oil embargo choked supplies, led to those lines at
the gasoline pump and sent prices up four times over, oil imports accounted
for 36 percent of U.S. consumption. President Nixon said the United States
should produce and conserve its way to energy self-sufficiency by 1980.
Instead, imports went up, past 40 percent when President Carter declared the
moral equivalent of war against the energy crisis of the late 1970s.
Conservation efforts begun in that era have made the nation more energy
efficient. But demand, and diminishing domestic production, have made it more
reliant on imports.
In 1990, Congress voted to declare that 50 percent dependence on imported oil
was the peril point for national security. Four years later, imports exceeded
half of U.S. use for the first time.
The estimate now is 56 percent, and increasing. According to the Energy
Department, net imports could account for nearly 70 percent of U.S.
consumption by 2020.
No crisis, though, so no issue, except for the complaint of the small oilmen
and their congressional allies, who want legislation to help them stay in
business.
There are House and Senate bills to do it with tax breaks and other
incentives. A $246 million tax break for small producers is part of the
Republican tax cut, passed by Congress but bound for a veto when it gets to
President Clinton.
By Energy Department estimate, U.S. oil consumption is expected to increase
by nearly 3 percent this year and next. But domestic oil production is
forecast to decline by 3.7 percent this year and an additional 1.1 percent in
2000.
The independent producers who lodged the cheap oil complaint argued that
Saudi Arabia, Mexico, Venezuela and Iraq had been dumping cheap oil in
violation of U.S. trade laws, at the expense of their business. The group
called Save Domestic Oil Inc. sought to trigger anti-dumping laws, which
could have led to steep tariffs on about 60 percent of the oil imported into
the United States. It was rejected for lack of broad support in the oil
industry; and while the independent group said it would appeal, that would
take years.
The American Petroleum Institute, representing major producers, had opposed
the trade move by the independents.
``There is no question that low world oil prices have seriously harmed U.S.
producers, their workers and related industries,'' the API said after the
case was dismissed. ``Many thousands of people have lost their jobs and many
firms have been shut down. But these low prices were set by the forces of
supply and demand in international markets, not by alleged unfair pricing.''
Those markets can pump prices up, too.
That's been the more customary American complaint about foreign producers.
EDITOR'S NOTE - Walter R. Mears, vice president and columnist for The
Associated Press, has reported on Washington and national politics for more
than 30 years.
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