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Majors Say Oil Dumping Charge Lacks Merit

Majors Say Oil Dumping Charge Lacks Merit

Following in the footsteps of gas pipelines, major producers have asked the federal government to reject an independent producer-backed petition that seeks to have tariffs imposed on crude oil imports from four foreign countries accused of illegal dumping.

In a letter to Commerce Secretary William M. Daley, John Sharp of the Natural Gas Supply Association (NGSA) urged the department to dismiss a pending petition to have tariffs assessed on imports from Mexico, Venezuela, Saudi Arabia and Iraq. A coalition of independent domestic producers, called "Save Domestic Oil," filed the petition in an attempt to stop the foreign producers from allegedly dumping oil in the United States.

Sharp said the charges outlined in the petition were "without merit," arguing that the foreign producers had "rational economic reasons" for selling their oil at lower prices. Also, NGSA believes that imposing a tariff would not be in the "best interest" of domestic producers because the foreign producers would simply sell their oil to other countries, resulting in "costly inefficiencies" in the U.S. crude oil distribution, transportation and refining system, he wrote.

The producer group further fears such restrictions could trigger "retaliatory actions" by other foreign countries. "Indeed, we are concerned that the.....petition has apparently caused Mexico to reconsider its decision to eliminate the tariff it imposes on imports of natural gas from the U.S. NGSA members support and have an economic interest in the early elimination of that tariff."

The association's members "are struggling to recover from the effects of the record low oil prices of last year and early this year, and we sympathize with others who are having the same experience. However, we are convinced that imposing trade restrictions will not aid in the recovery of our industry," Sharp said.

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