GOVERNMENT
Chemical firms optimistic on oil imports Industry completes initial phase of campaign to gain greater access to low-cost petrochemical feedstock from abroad In an air of tempered optimism, the chemical industry last week completed the initial phase of its concerted 1969 campaign to gain greater access to low-cost petrochemical feedstock from abroad. The optimism apparently stems not only from the industry's conviction that it has presented an unshakable case for a radical over haul of the Government's restrictive oil import policies, but from indica tions that, for the first time in recent memory, the climate in official Washington appears conducive to such proposed changes. The so-called Chemco group—nine of the major integrated producers of petrochemicals—last week rounded out the industry's group presentations to the Cabinet-level White House task force reviewing U.S. oil import poli cies by calling for the eventual elim ination of all controls on "imports of petroleum used in the manufacture of petrochemicals" (C&EN, June 23, page 37). The Chemco presentation followed by six days that of the larger "AllChem" group which, while calling for an easing of existing oil import restrictions for petrochemical makers, stopped short of advocating complete elimination of controls. The overall chemical industry posi tion on oil import restrictions remains basically the same as it has right along:
M. Huber, Koppers, Marbon Chemi cal, Monsanto, National Distillers & Chemical, Olin Mathieson, PPG In dustries, Publicker Industries, Sid Richardson Carbon, and Union Car bide. Together these 25 companies constitute the bulk of the industry. The Chemco group supports AllChem's recommendations for a boost in petrochemical import quotas and implementation of an import-for-ex port bonus "as immediate preliminary steps" to alleviating competitive dis advantages on raw materials. The ultimate solution, the group feels, is the elimination of import quo tas altogether. It terms the petro chemical industry "an unintended vic tim" of oil import controls, which have resulted in domestic prices for crude oil and its derivatives which are 60% higher than on the world market. Al ternate domestic feedstocks are ex pected to rise to the price of crude oil derivatives, Chemco says. Thus, it adds, "all sources of petrochemical raw materials in the U.S. will be un economical when compared to the in dustry's foreign competition." The nine Chemco companies include Cel anese, Dow, Du Pont, Eastman, Mon santo, National Distillers & Chemical, Olin Mathieson, Publicker, and Union Carbide. Both groups stress the long-term
Petrochemical producers must be granted greater access to low-cost, foreign feedstock if they are to be competitive in world, as well as domes tic, markets. The consequences of the continuation of existing tight restrictions on oil imports, in the words of the Chemco group, for example, will be to "sharply curtail the indus try's growth rate, reduce its con tribution to the [nation's] balance of trade, restrict its range of products, and increase construction of produc tion facilities elsewhere in the world." AllChem—a group of 25 petrochem ical producers of varying size and degree of integration and including the nine Chemco companies—urges the Presidential task force to recommend that the volume of foreign oil which petrochemical producers now are per mitted to import under the existing import control program "be substan tially increased each year," and that a petrochemical "import-for-export" bo nus quota plan along the lines of the one authorized but never implemented by the previous administration be es tablished. AllChem member compa nies are: Cabot, Celanese, Chemplex, Copolymer Rubber and Chemi cal, Dart Industries, Dow, Du Pont, Eastman Kodak, El Paso Products, Ethyl Corp., Ethyl-Dow, Firestone, Foster Grant, Goodrich, Hercules, J.
The U.S. balance of trade in petrochemicals has leveled off Since 1964 the U.S. balance of trade in petrochemi cals has levelled off:
- Petrochemical exports (Europe. U.S., Canadd combined)
At the same time our overall trade position in chemi cals has leveled off:
European petrochemical_ exports
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C & E N J U N E 30, 1969
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consequences of present import re striction on U.S. balance of trade (see box). Reason for the basic difference be tween the two groups apparently is the concern of nonintegrated producers that savings on feedstock costs would not be passed along to those compa nies further down the petrochemical processing line. These companies pre fer to have the import tickets, which are worth $1.25 a barrel. There seems to be a new note of optimism among oil import specialists within the chemical industry that the White House reappraisal of U.S. oil import policy will result in an easing of present import restrictions for pet rochemical producers. For example, they hail the "objective makeup" of the Cabinet-level task force, which they point out privately is a far cry from the composition of previous ex ecutive branch study groups in this area. More important, however, is the shift under way on Capitol Hill. As one industry authority so acutely describes the phenomenon, the oil in dustry is in disfavor. Oil now has as many enemies as it does friends in Congress. Witness the Hart antitrust subcommittee investigation, Sen. Proxmire's relentless assault on the cost of the oil import program to the Amer ican consumer, and the furor which the New England Congressional dele gation has raised over socioeconomic inequities under the existing program. Of the three, the last far and away is the most significant. President Nixon is fully aware that in Sen. Kennedy he has an extremely popular Presidential contender who is prepared and capa ble of making a public issue out of this $4 billion a year subsidy the tax payer is bestowing upon the oil indus try in the form of the oil import con trol program.
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