03.07.08

Oil Prices, OPEC, And The “NOPEC” Bill

Leahy: As OPEC Again Says No To President Bush, U.S. Should Respond By Enacting The “NOPEC Bill” . . . Judiciary Committee Chairman Urges Bush To Drop Opposition To Bill

[WASHINGTON (Friday, March 7, 2008) – This week, for the second time this year, the Organization of Petroleum Exporting Countries (OPEC) rejected appeals from President Bush to increase its supplies of oil (“President Fails To Budge OPEC On Production,” NYT, March 6, p.1A).  The President had even traveled to Saudi Arabia in January to make the request.  The chairman of the Senate Judiciary Committee, Sen. Patrick Leahy (D-Vt.), took the Senate Floor Friday to call on the President to finally end his opposition to the committee-passed “NOPEC Bill,” which would allow U.S. antitrust laws to be used when oil prices are fixed by cartels like OPEC.   With oil prices reaching new record highs this week and with gas prices also stuck at high levels in Vermont and other states, Leahy called for urgent action by the White House to help provide Americans with relief at the pumps and to cooperate with the House and Senate on alternative energy steps forged on Capitol Hill.  The Senate Judiciary Committee last April – almost a year ago -- passed the No Oil Producing and Exporting Cartels Act (NOPEC) which would allow the federal government to take legal action against any foreign state, including members of OPEC, for price fixing and for artificially limiting the amount of available oil.  The bill is still pending further action, stalled by White House and Republican opposition.  Leahy’s Senate Floor remarks are below:]

 

The Organization of Petroleum Exporting Countries (OPEC), an international cartel that limits the supply of oil to keep fuel prices high, is the principal cause of the relentless increase in oil prices.  This week, OPEC members again met and refused to increase the supply of oil.  If such a meeting took place in almost any other context, the participants would likely be arrested for an illegal conspiracy in restraint of trade. 

The administration should join with me, Senator Kohl, and 68 other United States Senators and 345 Members of the House of Representatives who have voted for NOPEC legislation, which would hold accountable certain oil producing nations for their collusive behavior, which has artificially reduced the supply and inflated the price of fuel. 

In April 2004, when American consumers were paying $1.78 per gallon at the pump, I warned that energy experts were “predicting that the price of gas may rise to $2.50 or $3.00 per gallon.”  This administration did nothing.  Last October, when American consumers were paying $2.87 per gallon at the pump, I warned that “oil may be on its way to over $100 a barrel.”  This administration did nothing. 

This week, oil reached a record $104 a barrel, and gas prices averaged $3.16 a gallon.  How much will families in Vermont and across America have to pay to heat their homes in this long winter, or to drive to work, before the President takes action?  Further, at a news conference last week, the President was not even aware that some are predicting that gas prices will hit $3.50 or even $4.00 a gallon by the spring.  He was simply not aware at how cripplingly high these prices really are for Americans.

Two facts are painfully clear: gasoline prices have more than doubled since the President took office, and the President has no plan to protect consumers and our economy.  He promised the American people that, with his family’s oil ties, he would effectively be able to jawbone OPEC into being nice to him, and that they would raise production to lower prices if he asked them.  That is now evident for all to see that this is just another unfulfilled commitment from this administration.

 

I have said this before, and I say it again today: the principal cause of the relentless increase in oil prices is not a natural supply issue, but market manipulation by the OPEC. In January, the President’s best attempt to increase the supply of oil was to tell Saudi King Abdullah that “paying more for gasoline hurts some American families.”  Indeed it does, and I am pleased the administration acknowledges the effects of rising gas prices on Americans.  But Saudi Arabia is a founding member of OPEC, which has every incentive to limit output and keep prices artificially high.  The futility of going to an OPEC member and pleading for it to raise output is now obvious to all.  Instead of President Bush holding hands with the oil cartel—literally and figuratively – the administration should join us in trying to protect the interests of the American people.

 

It is important to empha again that if a meeting such as the OPEC meeting that took place this week happened in almost any other context, the participants would likely be arrested for an illegal conspiracy in restraint of trade.  Yet this President stood in front of the King of the largest participant in the oil cartel and asked for relief, instead of demanding an end to this illegal activity. 

 

If the administration truly acknowledges the impact artificially high oil prices have on our Nation, it should join with this Congress and support NOPEC legislation.  Instead of pleading for help, the next time the President of the United States meets with members of a cartel, the President should explain that entities engaging in anticompetitive conduct that harms American consumers can expect investigation and prosecution. 

 

We cannot claim to be energy independent while we permit foreign governments to manipulate oil prices in an anticompetitive manner.  It is wrong to let members of OPEC off the hook just because their anticompetitive practices come with the seal of approval of national governments.

 

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