Oil Cartel bill Coasts in Committee but Prospects Unclear
The House Judiciary Committee yesterday cleared legislation meant to halt market manipulation by foreign cartels over concerns from some lawmakers about whether the bill might hurt U.S. interests overseas.
The panel approved the bill by a voice vote after several committee members -- mostly Republicans -- said they opposed the bill because it could significantly alter diplomatic relations between nations and potentially have a negative affect on U.S. energy supplies.
The "No Oil Producing and Exporting Cartels Act of 2007" (or NOPEC Act) -- sponsored by Judiciary Committee Chairman John Conyers (D-Mich.) -- attempts to declare illegal the practice of foreign nations acting together to limit the production of petroleum products or to set the price of oil.
If a foreign entity is found to be in violation of these provisions, U.S. officials could attempt to bring charges against them in federal courts under domestic antitrust law. The legislation is specifically aimed at the Organization of Petroleum Exporting Countries (OPEC), which some lawmakers have repeatedly accused of manipulating prices.
The ranking member on the panel, Rep. Lamar Smith (R-Texas), said that while he supports the premise of the bill, he fears it would do little to drive down gas prices and come saddled with unintended consequences.
"There is no certainty that enabling the attorney general to sue OPEC for an antitrust violation will result in lower gas prices for Americans," Smith said. "Given the instability that such a suit might create in the world oil markets, this legislation would be long on psychic compensation, but short on actual returns to American pocketbooks."
Smith was not alone in his opposition to the bill as some lawmakers said they were uncomfortable with the notion of bringing foreign governments into U.S. courts, especially if other nations started taking similar action against the United States.
"Would the United States be hauled into court in courtrooms all around the world based on the precedent that we set that we can haul them in here?" asked Rep. Dan Lungren (R-Calif.). "That's generally the reason why these things have been dealt with by the diplomatic side of the executive branch rather than bringing them into court."
Smith said he would ask the Government Accountability Office to provide a report on the possible effect of the bill on foreign policy, the trade balance, stationing of troops in the Middle East and likelihood of a retaliatory embargo against the United States.
Conyers said he would back asking the GAO for such a study but insisted the committee should move ahead with the legislation, saying the language would only broaden existing antitrust regulations.
"We don't have to stand by and watch OPEC continue to dictate the price of oil and gasoline without recourse," Conyers said. "By passing this measure, we begin along the long road to put our antitrust laws to work against the OPEC cartel like we would against any other international cartel that's fleecing American consumers."
The outlook for the floor remains somewhat unclear as House aides say the language will likely not be part of the Democratic leadership's summer energy package.
The Senate Judiciary Committee last month approved similar legislation -- as it has in years past -- but it also remains unclear when that bill will receive floor consideration.
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