Chemical & Engineering
NEWS JANUARY 1, 1968
The Chemical World This Week Export-for-import program to aid petrochemical makers Santa came a day early for U.S. petrochemical producers, bearing joyous tidings from the Federal Government of a new "export-for-import" program designed to "enhance" their competitive position "both at home and abroad." Although the program should go at least part of the way toward satisfying their demands for greater access to low-cost foreign feedstocks, domestic producers contacted generally were reluctant to comment on the Government's "gift" apparently until all the wrappings have been removed—as they were expected to be momentarily at press time. Irate and confused domestic oil interests displayed no such reticence, however, and immediately branded the new-program "another step toward the piecemeal dismantling of the oil import program." At the same time, the Government disclosed the welcome news that total allocations for petrochemical use for 1968 under the existing oil import program have been increased roughly 12,000 barrels a day from the 1967 level of about 67,000 barrels a day. ^.Announced jointly by Interior Secretary Udall and Commerce Secretary Trowbridge, the export-for-import program will permjt domestic petrochemical producers to import crude and unfinished oil "m relation to [their] exports of petrochemicals and selected petroleum products." From the sketchy details made available, the relationship of imports to exports apparently will be barrel-for-barrel on a hydrocarbon equivalency basis. (In 1966, the U.S. exported the hydrocarbon equivalent of some 50,000 to 60,000 barrels a day of crude oil in the form of finished petrochemicals. ) Full particulars on the plan will be worked out early m 1968 and will be submitted for proposed rule-making and public comment. The export-for-import program will be a supplement to, not a replacement for, the existing program of oil import allocations for petrochemical use. And it will lie outside the long-standing ground rule of the existing program limiting overall imports east of the Rockies to 12,2% of domestic produc-
Secretary Trowbridge Bearing joyous tidings tion of crude oil and natural gas liquids in that area. The existing oil import program also will undergo a significant change in that two "distinct" sectors will be established—one for energy use and one for petrochemicals. Both moves appear to be in line with suggestions contained in the socalled Chemco Plan (C&EN, Dec. 18, 1967, page 23)—a proposal by nine major chemical companies calling for the lifting of restrictions on imports of petrochemical feedstocks. The plan was first put forth formally last summer. But the two Secretaries say that, while embodying some of the Chemco suggestions, the latest moves "represent an alternative approach." They say that the new program "should provide a net benefit to the [U.S.] balance of payments situation and stimulate our domestic and international trade." They insist it will benefit "all companies, be they petroleum or chemical, who participate in the oil import program." They further maintain that, since imports will be equated with exports, the plan will have a "minimal" effect on the overall oil import program. None of the backers of the controversial Chemco plan contacted would
Secretary Udall
venture a comment as to how satisfactory an alternative the new changes in the oil import program appear to be from their points of view. But domestic oil interests made it abundantly clear that they don't see the program in the same beneficial light. "It is unthinkable that the Government would set up a system of economic handouts as a reward for past exports," a spokesman for the Independent Petroleum Association of America tells C&EN. This, he says, "would make the present 12.2% import ration meaningless. "If the plan is to permit petrochemical companies to earn imports based on future increases in exports, that would be another thing, entirely," he feels. But in any case, the impact of the export-for-import idea cannot beevaluated until it is made clear by proposed regulation, he points out. "This and other recent proposed changes in the oil import program are having the effect of changing the entire character of the quota system and of undermining industry's confidence in the program," he adds. "In our view these changes only serve to strengthen the determination of many members of Congress to stabilize the program through legislative action." JAN.
1, 1968 C&EN 9
