The Commerce Department, which usually sides with domestic companies in "dumping" cases against foreign exporters, rejected a complaint yesterday brought by independent U.S. oil producers accusing four countries of selling petroleum at unfairly low prices in the United States.
The department decided not to even investigate the petition filed by Save Domestic Oil Inc., an Oklahoma-based coalition of small oil firms, on grounds the group had "insufficient industry support." Multinational oil firms opposed the complaint, bolstering Commerce's conclusion that the case could not advance under trade laws because there was more industry opposition than support for the effort.
Although the oil producers vowed to appeal to the courts, the ruling deals a severe and perhaps fatal blow to a case that threatened to inflame diplomatic ties with several key U.S. allies--notably Saudi Arabia and Mexico--whose oil might have been subject to stiff U.S. duties if the case had gone forward. The other two countries named in the complaint were Venezuela and Iraq.
When the complaint was filed in late June, it was ridiculed by a number of economists and energy experts, who questioned how dumping--that is, the sale at below-market prices--could be occurring with a commodity that is widely traded on global markets. But trade experts warned that the case had to be taken seriously simply based on the history of the dumping laws. The law is designed to protect the U.S. market from predatory foreign competition, but critics assert it is rigged in favor of domestic companies, and Commerce is traditionally sympathetic to the complaints of U.S. industry.
Accordingly, the rapid dismissal of the case came not only as a relief but something of a pleasant surprise to the defense. "The sound you hear is people celebrating and rescheduling their vacations" that they now can take, said Gary Horlick, an attorney who represented Mexico, referring to the clink of glasses and buzz of conversation that could be heard over the phone.
Charles Verrill, an attorney for Save Domestic Oil, said the group will appeal to the Court of International Trade in New York, "and we're going to ask for expedited consideration." He noted that some of the major oil companies that opposed the complaint, such as Occidental Petroleum Corp., have told the government in other situations that they are shutting domestic wells and laying off American workers because of foreign competition.