Mexico’s Energy Secretariat Luis Tellez has signaled that hiscountry plans to lift the 4% tariff on natural gas imported fromthe United States.

The disclosure came soon after the U.S. Commerce Departmentrejected a petition brought by a Oklahoma-based group ofindependent producers that sought to have tariffs assessed on crudeoil imports from Mexico, Venezuela, Saudi Arabia and Iraq. Theproducers accused the foreign countries of dumping oil in theUnited States and driving them out of business.

The International Trade Association, a Commerce agency,dismissed the petition because it lacked adequate support from thedomestic industry. Under law, at least 25% of the production in theaffected region must back the petition for it to be accepted.Support for the petition was mostly confined to the strugglingindependent producers, while the major oil/gas producers and gaspipelines opposed it.

Although the producer petition primarily addressed oil, it hadrepercussions for the U.S. gas industry because Mexico — whichhad intended to remove its 4% tariff on gas imports earlier —decided to put it on hold in retaliation. “…..[I]f you hitsomebody in one place, they’re going to strike back in another,”observed Allen Mesch, a professor at Southern Methodist Universityin Dallas, and expert on the oil and gas industry.

In the wake of the Commerce decision, Energy Secretary BillRichardson said he spoke with Tellez, who indicated that he wouldlift the tariff on natural gas imports from the U.S. Tellez was tohave announced his decision at a press conference in Mexico Citylate Tuesday.

“Mexico welcomes this decision by the Department of Commerce,”the Mexican Embassy said a press statement. The petition, which wasfiled by a group of producers called “Save Domestic Oil,” contained”spurious and false” claims, it noted. “It…..in no way providedevidence that Mexico engaged or engages in unfair trade practicesregarding its oil exports.” In the end, “Mexico was confident thatan objective application of the law would result in dismissal.”

Had Commerce accepted the independent producers’ petition, Meschbelieves the immediate reaction would have been “hostility towardsU.S. companies,” which would have been reflected in reducedcommercial opportunities. Moreover, he seriously doubted domesticproducers would have seen any marked improvement in the price ofoil as a result.

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