Opec backlash brews as US lawmakers eye 1890 law as club
WASHINGTON (BLOOMBERG) – Some US lawmakers are seizing on the energy price surge to revive long-standing legislation that would subject the Opec oil cartel to the same antitrust laws used more than century ago to break up Standard Oil’s monopoly.
The “No Oil Producing and Exporting Cartels Act” – known as NOpec – would allow the US government to sue members of the Organization of Petroleum Exporting Countries for manipulating the energy market, potentially seeking billions of dollars in reparations.
The legislation faces difficult odds amid concerns about diplomatic fallout that has led the State Department to oppose it in the past. But the House Judiciary Committee did approve the latest iteration by a voice vote in April. A Senate version has attracted sponsors from across the political spectrum, from Iowa’s conservative Republican Chuck Grassley to Vermont’s liberal Democrat Patrick Leahy. No floor votes have been scheduled.
“We’ve been talking to a number of members about it,” Mr Leahy said in an interview on Wednesday (Nov 17). He said he intended to discuss the legislation in a floor speech.
While Opec hasn’t set prices since the 1980s, its members periodically agree to boost or cut production. The legislation could have widespread consequences.
“We call it a nuclear weapon with a huge and uncertain impact,” said Bob McNally, president of consultant Rapidan Energy Group and a former White House official. “The remedies in the NOpec act range from a slap on your wrist to seize all your assets.”
“I think were the president to call for it it would pass,” Mr McNally said.
President Joe Biden hasn’t expressed an opinion on the legislation but on Wednesday he urged the Federal Trade Commission to probe possible illegal conduct in US gasoline markets. In a letter to FTC Chair Lina Khan, Mr Biden expressed concern about the difference between pump prices and the cost of wholesale fuel, while citing what he said was “mounting evidence of anti-consumer behavior by oil and gas companies.”
The White House didn’t respond to a request for comment on whether Mr Biden supports the measure. Mr Biden, as a senator in 2000, co-signed a letter that called for legal and judicial action against Opec, calling the cartel’s behavior in violation of US antitrust laws. In 2007, he co-sponsored a version of NOpec legislation.
The NOpec legislation has been introduced several times over the past two decades as US gasoline prices have risen – and it passed both chambers of Congress in 2007 only to die amid a veto threat from President George W. Bush.
Asked about the prospect of bringing the bill to the floor for a vote, House Speaker Nancy Pelosi said she was concentrating on getting Mr Biden’s social spending bill passed. “We are focused on what we are doing right now,” she said.
Under the legislation, the Justice Department would be able to bring lawsuits against oil cartel members for antitrust violations. Even if the Justice Department were never to act on its power to sue, the mere existence of this option might be enough to force the cartel to change its behavior.
American Petroleum Institute, a trade association for the oil industry, and the US Chamber of Commerce have come out strongly against the bill in the past.
“The result might be a flood” of oil, said Kevin Book, managing director of research firm ClearView Energy Partners. “It will crater the price of oil here.”
Talk of reigning in Opec seems to “re-emerge whenever gasoline prices rise” but it “remains a counterproductive response,” said Jeffrey Kupfer, a former Chevron Corp. policy adviser who served as an Energy Department official in the Bush administration from 2006 to 2008.
“It would lead to more volatility in the oil market, lower levels of investment, trade disputes,” Mr Kupfer said, “and ultimately higher prices for the American consumer.”
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