NOPEC: Should the OPEC Cartel be Subject to U.S. Anti-Trust Law For Fixing Oil Prices? (H.R. 5904)
Do you support or oppose this bill?
What is H.R. 5904?
(Updated September 19, 2019)
This bill — the NOPEC Act — would subject the Organization of the Petroleum Exporting Countries (OPEC) cartel subject to U.S. anti-trust law by removing a sovereign immunity shield that was created by judicial precedent and therefore protects OPEC nations. Specifically, it’d be a violation of anti-trust law for any organization’s members to cooperate to: 1) limit the production or distribution of oil, natural gas, or any other petroleum product; 2) set or maintain the price of oil, natural gas, or any other petroleum product; or 3) take any other action to restrain the trade of oil, natural gas, or any other petroleum product.
OPEC is considered to be a cartel, which is a group of suppliers or buyers of a commodity or product (in this case petroleum suppliers) who coordinate their actions to increase their collective profits and decrease competition within the market they participate in. OPEC was created in 1960, it currently has 15 member nations which collectively provided 44% of global oil production and possessed 73% of the world's oil reserves as of 2016.
By removing the sovereign immunity shield from OPEC, whose members are foreign countries, the Dept. of Justice would be able to bring actions against OPEC members in federal court.
The bill’s full title is the No Oil Producing and Exporting Cartels (NOPEC) Act of 2018.
Argument in favor
For too long, the OPEC cartel has fixed oil prices to maximize their profits and decrease competition while avoiding accountability for anti-competitive behavior. This bipartisan bill ends that by ensuring the federal government can enforce anti-trust law against OPEC.
Argument opposed
It won’t do any good for the U.S. to go after OPEC in federal court, as those countries will try to manipulate petroleum markets in other ways. The administration could tell the Dept. of Justice to not pursue an anti-trust action against OPEC for diplomatic or economic reasons.
Impact
OPEC or other petroleum market cartels; federal courts; and the DOJ.
Cost of H.R. 5904
The CBO estimates that enacting this bill would have an insignificant impact on the deficit
Additional Info
In-Depth: Sponsoring Rep. Steve Chabot (R-OH) introduced this bill to subject OPEC to U.S. anti-trust law:
“As we have seen time and again, when oil prices are low, international oil cartels ramp up their price-gouging efforts in order to manipulate the global crude oil market.It’s high time that we do more to fight the artificial production controls that continue to keep the price of crude oil and gasoline arbitrarily high in the United States. The legislation we approved today would significantly help to fight price-gouging by subjecting OPEC nations to antitrust laws, and prohibiting them from unilaterally withholding supply with the intent of raising prices or creating a shortage.”
Original cosponsor Rep. David Cicilline (D-RI) added:
“Since 1960, OPEC has manipulated the supply and price of oil with total impunity under American law. They constantly drive the cost of oil higher, meaning working people in our country end up paying more for gas for their car or heat for their homes. It’s time for this to end. I’m proud to introduce the NOPEC Act to give Americans relief from the high costs OPEC has forced on them for more than half a century.”
This legislation passed the House Judiciary Committee on a voice vote and has the support of six bipartisan cosponsors, including four Republicans and two Democrats.
Media:
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Sponsoring Rep. Steve Chabot (R-OH) Press Release
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House Judiciary Committee Press Release
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CBO Cost Estimate
Summary by Eric Revell
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