Shale producers to Trump: rethink view on role of oil industry

By Luke Geiver | May 23, 2017

Oil producers from the Southwest U.S. are urging the Trump administration to rethink how the federal government views crude oil. The Panhandle Import Reduction Initiative—a group of nearly 1,000 producers from Oklahoma, Texas and New Mexico—has written a letter asking the Secretary of Commerce to view the crude oil industry the same way it views the industries of steel, aluminum, vehicles, aircraft, shipbuilding and semiconductors.

“Crude oil should be recognized as one of the critical elements of U.S. manufacturing and defense industrial bases, which we must defend against unfair trade practices and other abuses,” the group wrote in their letter.

PIRI recognized the administration’s recent work to curb Chinese steel export issues against the U.S., as an example to follow when investigating and changing the way it approaches U.S.-based crude oil. The most appropriate action needed, according to PIRA, is an investigation by the Department of Commerce on Saudi Arabia and OPEC. The review would examine the moves made by OPEC to harm U.S. producers from 2014 to 2016 by ramping up production at a time when supply was already on par or above demand.

“For national security, the unfair trade act of overcapacity against U.S. oil producers must stop,” PIRA wrote, adding:

'Stopping overcapacity is paramount, as in the case of Chinese steel, of Saudi Arabian and to lesser extent of Gulf Nations production and export of crude oil and its potential to be used at any time as a tool to compete with and damage American producers in a future strategic “price war” for market share which occurred from 2014 to 2016. This should include the purpose of spare capacity in Saudi Arabia as an offset to supply disruption threats to the U.S. which now has domestic production that would leave it unaffected. There is a potential that spare capacity can again be used and would constitute an abuse as overcapacity to lower prices and threaten the new American crude oil industry.'

According to PIRI, during the two-year downturn in the global industry that happened from 2014 to 2016, 150 U.S.-industry-related companies filed bankruptcy, $150 billion of capital deployment was delayed or cancelled and more than 300,000 U.S. industry-related jobs were lost.