Mexico Removes Duty on Gas Imports
Mexico last Monday lifted its 4% tariff on natural gas imported
from the United States, the Energy Ministry announced. This clears
the way for expanded gas sales by U.S. companies into the
fast-growing markets in northern Mexico.
The decree eliminating the tariff was signed by President
Ernesto Zedillo. It came a week after the U.S. Commerce Department
rejected a petition brought by an Oklahoma-based group of
independent producers to have tariffs assessed on crude oil imports
from Mexico, Venezuela, Saudi Arabia and Iraq. The producers
accused the foreign countries of dumping oil in the United States
and driving them out of business.
The International Trade Association, a Commerce agency,
dismissed the petition on Aug. 9th because it lacked adequate
support from the domestic industry. Under law, at least 25% of the
production in the affected region must back the petition for it to
be accepted. Support for the petition was mostly confined to the
struggling independent producers, while the major oil/gas producers
and gas pipelines opposed it.
Although the producer petition primarily addressed oil, it had
repercussions for the U.S. gas industry because Mexico - which had
pledged to remove its 4% tariff on gas imports on July 1 - decided
to put it on hold in retaliation. "...[I]f you hit somebody in one
place, they're going to strike back in another," observed Allen
Mesch, a professor at Southern Methodist University in Dallas, and
expert on the industry.
"Mexico welcomes this decision by the Department of Commerce,"
the Mexican Embassy said in a press statement. The petition, which
was filed by a group of producers called "Save Domestic Oil,"
contained "spurious and false" claims.
Had Commerce accepted the independent producers' petition, Mesch
believes the immediate reaction would have been "hostility towards
U.S. companies," which would have been reflected in reduced
commercial opportunities. Moreover, he seriously doubted domestic
producers would have seen any marked improvement in the price of
oil as a result.
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