Some Oilmen Call for Tax on Fuel Imports into US Move Would Benefit Domestic Production and Cut Reliance on Gulf

Article excerpt

FOREIGN oil supplies a lot of power for the United States, but it can generate bad news, too. Just look at some items reported last week:

*A Liberian-registered tanker grounded off the Shetland Islands in the north Atlantic broke open, creating one of the world's largest oil spills.

*Merely two years after the Gulf war, US troops were again returning to Kuwait to protect it from aggression by Iraq. The American Petroleum Institute reported that domestic US oil production fell last year to the lowest level since 1960. Meanwhile, rising consumption boosted US dependence on petroleum imports.

*The Commerce Department reported that foreign oil cost the US $17.72 per barrel in November, down from $18.15 a month earlier. However, oil prices rose on the news that the president of the Organization of Petroleum Exporting Countries will visit Middle East members to orchestrate a production cut to achieve OPEC's target price of $21 a barrel.

Because of the cost and risk of foreign oil, imports should be taxed, says a trio of independent oil and gas executives.

They are urging Bill Clinton, who moves into the White House tomorrow, to impose such a tariff during his first 100 days in office. Other analysts dispute the usefulness, fairness, and likelihood of an import tax.

President-elect Clinton is considering several measures, including a tax on oil imports or an increase in the levy on gasoline, to cut the federal budget deficit.

The oil company chairmen - Apache Corporation's Raymond Plank, Enron Oil and Gas Company's Forrest Hoglund, and Mitchell Energy and Development Corporation's George Mitchell - estimate that an import fee of $2.50 a barrel would put $7.3 billion in Uncle Sam's wallet.

It would also fill their own wallets. Independent companies usually do not import oil, but sell only their own domestic production. They would be able to raise their price by the amount that a tax increased the cost of foreign oil.

"Yeah, there's an element of {the call for an import fee} that is self-serving," admits Roger Plank, Apache's vice president of communications and the chairman's son. However, he argues that the US benefits from domestic production, while foreign oil bears the added, unrecognized cost of sending troops to protect foreign producers.

Mr. Plank accuses OPEC of practicing "predatory pricing" to drive US producers out of business. "There's no free market in oil," he says. …


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