Houston Chronicle: U.S. lawmakers take a jab at OPEC: House legislation would label oil cartel’s actions as illegal

David Ivanovich,
Published: May 23, 2007

WASHINGTON — The House took aim at the Organization of the Petroleum Exporting Countries on Tuesday, voting overwhelmingly to brand the cartel’s efforts to control world oil prices illegal.

And with support of the legislation strong in the Senate as well, President Bush soon could be thrust into the unenviable position of siding with OPEC producers at a time of painfully high gasoline prices.

As American motorists forked over a record average $3.21 a gallon — according to the most recent AAA survey — the House voted 345-72 Tuesday to approve a bill that would authorize the attorney general to sue the OPEC countries in U.S. courts.

Dubbed the “No Oil Producing and Exporting Cartels Act of 2007” or “NOPEC” bill, the measure would amend the Sherman Act to make it illegal for foreign governments to try to limit oil and gas production to try to control energy prices.

Championed by House Judiciary Committee Chairman John Conyers, D-Mich., the bill would essentially make it illegal for foreign nations like those in OPEC to operate a cartel.

Under federal law, foreign governments cannot be sued for failing to comply with federal antitrust laws.

“We don’t have to stand by and watch OPEC dictate the price of our gas,” Conyers said. “We can do something about … this anti-competitive, anti-consumer behavior. And we are.”

Proponents of the legislation point out that the OPEC countries account for more than 40 percent of the world’s conventional oil supply.

The Energy Information Administration, in a report looking out to 2030, predicted OPEC’s share of conventional oil production will grow slightly over the coming years.

While the cartel has had much trouble over the decades controlling oil prices as much as envisioned, the organization has proven far more adept in recent years.

Indeed, the London-based Centre for Global Energy Studies this week credited OPEC’s decision to restrict its output for keeping oil prices above $60 a barrel.

In the Senate While the House was the first to act, OPEC is no more popular on the other side of Capitol Hill.

Last month, the Senate Judiciary Committee — with members from across the political spectrum — unanimously approved comparable NOPEC language.

Senate Majority Leader Harry Reid, D-Nev., has been stitching together various energy proposals with plans to bring a major energy bill to the floor next month.

While the NOPEC provision is not currently part of that package, Senate staffers say the bill might well be amended on the floor to include the NOPEC language.

“It is long past time for this to become law,” Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., said Tuesday.

White House officials, however, are already raising the prospect of a veto if the measure ever reaches the president’s desk.

The Office of Management and Budget warned the bill “has the potential to lead to oil supply disruptions and an escalation in the price of gasoline, natural gas, home heating oil and other sources of energy.”

Administration officials say the OPEC countries’ assets in the United States would be the likely targets if a court were to award damages in a suit. And that “would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to U.S. refiners.”

Business opposition At least some business interests vehemently oppose the measure.

The U.S. Chamber of Commerce, in a letter to House members, argued that the measure would set a “dangerous precedent,” while Red Cavaney, president of the American Petroleum Institute, described the legislation as “very strange.”

Cavaney argued that lawmakers could likewise be accused of withholding oil production, since they have refused to let operators drill off most of the nation’s coastline.

“They’re criticizing others for the very actions they’ve done,” Cavaney said.

Some officials in the oil-producing countries already have expressed concerns that “a nation caught up in the throes of a populist movement” might look to seize plants and even nonenergy assets here in the United States that are owned by these foreign governments or their affiliated companies, noted Kevin Book, an energy analyst with Arlington, Va.-based Friedman, Billings, Ramsey & Co. And those fears could prompt a flight of capital.

Locally located Many of those foreign assets, of course, are in Houston, the center of the nation’s energy industry.

Houston-based Motiva Enterprises, for instance, is a joint venture between Shell Oil Co. and Saudi Aramco.

Asked about the House vote Tuesday, Motiva spokesman Stan Mays said: “Motiva is watching the bill closely and will assess how it would impact our business should it become law.”

Houston-based Citgo is the U.S. arm of Venezuela’s national oil company, Petroleos de Venezuela. Citgo spokesman Fernando Garay said: “Due to the complexity of the issue, we will need to review that document in its final form before making any comment.”

A spokesman for OPEC in Vienna, Austria, did not respond to questions about the legislation Tuesday.

An uncomfortable position For the Bush White House, who critics have long accused of favoring the oil industry, being presented with a NOPEC bill would make for an unwelcome political position.

Indeed, the administration was already under attack Tuesday.

“The Bush administration’s threat to veto this bill is just further proof that the administration favors the international oil cartel over the American consumer,” Conyers said.

But no matter how uncomfortable, “the president would have to veto the bill because of the international implications it has,” argued Lee Fuller, vice president of government relations for the Independent Petroleum Association of America.

Enough to override The House vote Tuesday far exceeded the number needed to override a presidential veto. But Fuller suspects lawmakers might approach the issue “slightly differently” if a vote to override were seriously being considered.

Among Houston area lawmakers, the ones to vote against the bill were: Rep. Kevin Brady, R-The Woodlands; Rep. Ted Poe, R-Humble; and Rep. Ron Paul, R-Lake Jackson.

Brady said he dismissed the bill as “a political gimmick that won’t lower gas prices a penny.”

But Rep. Sheila Jackson Lee, D-Houston, spoke up in favor of the measure, calling it a “thoughtful piece of legislation.”

[email protected]

 

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.