The US Congressional Judiciary Committee on Thursday approved a bill that allows the US Department of Justice alone to sue members of the Organization of Petroleum Exporting Countries (OPEC) and its allies for allegedly conspiring to raise oil prices, fight monopoly, and limit supply cuts that raise oil prices. International crude prices.
The "No to Oil Production and Export blocs" bill, known as "NOPEC" - sponsored by Republican Representative Chuck Grassley, Democratic Representative Amy Klobuchar and others - was supported by 17 members of the Senate Judiciary Committee, while 4 members rejected.
White House spokeswoman Jen Psaki said the administration had concerns about the "potential ramifications and unintended consequences" of the legislation, particularly in light of the Ukraine crisis.
She added that the White House is studying the bill, and versions of the legislation have failed in Congress for more than two decades.
But lawmakers are growing worried about a somewhat higher inflation boost in US gasoline prices, which briefly hit a record above $4.30 a gallon this spring.
"I think free and competitive markets are better for consumers than markets controlled by a conglomerate of state-owned oil companies... Competition is one of the most important foundations of our economic system," Klobuchar said.
NOPEC would change US antitrust law to abolish the sovereign immunity that has long protected OPEC and its state oil companies from lawsuits.
The bill needs to be passed by the Senate and the House of Representatives, and then signed by President Joe Biden into law.
And if NOPEC becomes a law in force, the US Attorney General will be able to sue OPEC or its members - such as Saudi Arabia - in a federal court, and he will also be able to sue other producers allied with OPEC - such as Russia - working with the organization to reduce supplies within the framework of what is known as the “OPEC Plus” group (+OPEC).
fuel pumps pain
The committee said in a statement that the new law would allow the US Department of Justice to hold OPEC and its partners accountable for their "anti-competitive activities."
She added that the law "gives the attorney general another additional tool to prosecute antitrust violators, while still allowing the (US) administration to calculate the consequences of foreign policy."
"Americans are feeling the pain at the fuel pumps with record prices, while Russia, Venezuela, Iran and other hostile countries are benefiting," she said.
The committee added that "NOPEC is a bill that will help our government to enforce antitrust laws against these countries," noting that former President Donald Trump supported the bill as well as current President Joe Biden when he was a member of the US Senate.
And she considered that OPEC controls 70% of all oil traded internationally and 80% of all oil reserves," stressing that this "anti-competition and manipulative behavior in oil prices directly harms American consumers," as she put it.
America against OPEC
By passing the law, the US attorney general will gain the ability to sue the oil cartel (conglomerate) or its members in a federal court, and it can also sue other producers such as Russia, which is working with OPEC in a broader alliance known as “OPEC Plus” to control the level of production.
It is not yet clear how a federal court can enforce antitrust rulings on a foreign country, but several unsuccessful attempts to enact the controversial law over more than 20 years have alarmed Saudi Arabia, which leads the Organization of the Petroleum Exporting Countries, prompting it to put pressure on the US administration every time. A copy of this law is presented.
Previous versions of the NOPEC bill failed, amid resistance from oil industry groups such as the American Petroleum Institute.
But anger recently escalated in the US Congress over high gasoline prices, which helped push inflation to its highest level in decades and increased the chances of the bill's success this time.
OPEC producers have rejected requests from the United States and its allies to open the oil taps in more than the gradual quantities agreed upon between them, as global consumers emerging from the Covid-19 pandemic and Russia's war on Ukraine keep oil prices in a boiling state.
Russia, which normally produces about 10 percent of the world's oil, could see its crude production fall by as much as 17 percent this year, as Moscow grapples with Western sanctions.
Some analysts said rushing into the bill could lead to an unintended backlash, including the possibility that other countries would take similar measures against the United States withholding agricultural production to support domestic farming, for example.
criticism
"It's always a bad idea to put politics aside when you're angry," said Mark Finley, a fellow in global energy and oil at Rice University's Baker Institute and an analyst and former director at the Central Intelligence Agency.
OPEC countries can also respond in other ways, according to a Reuters report.
In 2019, for example, Saudi Arabia threatened to sell its oil in currencies other than dollars if Washington passed a version of the NOPEC bill.
Doing so would undermine the dollar's status as the world's major reserve currency, reduce Washington's influence in global trade, and weaken its ability to impose sanctions on countries.
Saudi Arabia could also decide to purchase at least some weapons from countries other than the United States, to the detriment of the lucrative business of American defense contractors.
In addition, Saudi Arabia and other oil producers could restrict US investments in their countries or simply raise the prices of oil sold in the United States, undermining the bill's primary objective.
The United States and its allies already face significant challenges in securing reliable energy supplies, said Paul Sullivan, a Middle East analyst and non-resident senior fellow at the Atlantic Council's Global Energy Center. "The last thing we have to do is drop a bomb."
The largest US oil lobby, the American Petroleum Institute, also opposed the NOPEC bill, saying it could harm domestic oil and gas producers.
One of the industry's concerns is that the NOPEC regulation could eventually lead to overproduction by OPEC, driving down prices to the point that US energy companies are having a hard time raising production.
Saudi Arabia and other OPEC countries have some of the cheapest and easiest reserves in the world to produce.
ClearView Energy Partners, a nonpartisan organization, said excess oil pumping from OPEC producers, even at a time of concerns about Russian supplies, "could dampen drilling activity in the US oil patch, potentially jeopardizing domestic energy security and economic recovery." local risk.