Retaliation Risks from NOPEC Bill Exaggerated
(Bloomberg) -- A report commissioned by proponents of U.S. anti-OPEC legislation said that fears of retaliation by the oil cartel are overblown.
The "No Oil Producing and Exporting Cartels Act," or NOPEC, would subject the group of oil producers to possible antitrust action by the Justice Department. Opponents warn that its passage would hurt U.S. diplomatic interests and provoke retaliation against U.S. producers. But a new white paper written on behalf of Securing America’s Future Energy, which advocates for curtailing oil dependence, argues that those fears are overblown.
Past efforts to sue OPEC haven’t led to reprisals and it’s unlikely new attempts would either, said Harry First, a law professor at New York University and co-author of the report. “It doesn’t make sense to me to say that the Saudis would do things they haven’t done because it’s not in their self interest,” he said in an interview. "We prosecute a lot of big companies that are important to foreign economies and those countries have not retaliated."
The U.S. government is mixed on the bill’s potential impacts. Although the legislation cleared the House Judiciary Committee earlier this year, House Majority Leader Steny Hoyer told reporters earlier this week that it’s “not on our radar.” The Trump administration has yet to give its stance on the legislation, but Donald Trump has repeatedly attacked OPEC on Twitter over high oil prices.
Meanwhile, U.S. Energy Secretary Rick Perry has warned that the legislation could have “unintended consequences,” a position echoed by some analysts.
“If NOPEC legislation were passed and took effect, it could lead to greater volatility in crude prices, including steep falls that would fatally damage the U.S. shale oil boom while also hurting alternative energy investors and consumers and the broader economy,” said Bob McNally, the president of consulting firm Rapidan Energy Group.
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