A United States Senate committee passed a bill yesterday that could expose members of the Organisation of the Petroleum Exporting Countries (OPEC) like Nigeria and partners to lawsuits for collusion on boosting crude oil prices.
The No Oil Producing or Exporting Cartels (NOPEC) bill sponsored by senators, including Republican Chuck Grassley and Democrat Amy Klobuchar, passed 17-4 in the Senate Judiciary Committee, a Reuters report said.
Versions of the legislation have failed in Congress for more than two decades, but lawmakers are increasingly worried about rising inflation driven in part by prices for US petrol, which briefly hit a record above $4.30 a gallon recently.
“I believe that free and competitive markets are better for consumers than markets controlled by a cartel of state-owned oil companies … competition is the very basis of our economic system” Klobuchar said.
NOPEC would change US antitrust law to revoke the sovereign immunity that has long protected OPEC and its national oil companies from lawsuits, the report indicated.
However, the bill must pass the full Senate and House and be signed by President Joe Biden to become law.
If passed, the US attorney general would gain the ability to sue OPEC or its members, such as Nigeria, Saudi Arabia and others in federal court. Other producers like Russia, which works with OPEC in wider group known as OPEC+ to withhold output, could also be sued.
Saudi Arabia and other OPEC producers have rebuffed requests by the US and other consuming countries to boost oil production beyond gradual amounts, even as oil consumption recovers from the COVID-19 pandemic and Russian supply falls after its invasion of Ukraine.
OPEC+, which cut production when oil prices crashed to historic lows when the pandemic slashed oil demand, agreed on Thursday to stick to its existing plans to reverse the curbs with modest increases for another month.
NOPEC is intended to protect US consumers and businesses from engineered spikes in the cost of fuel, but some analysts warn that implementing it could also have some dangerous unintended consequences.
In 2019, Saudi Arabia threatened to sell oil in currencies other than the dollar if Washington passed NOPEC, a move that could undermine the dollar’s status as the world’s main reserve currency, reduce Washington’s clout in global trade and weaken its ability to enforce sanctions on nation states.
Previous versions of the NOPEC bill have failed amid resistance by oil industry groups like the American Petroleum Institute (API).
But anger has risen lately in the US Congress about soaring petroleum products prices that have helped fuel inflation to the highest level in decades, raising the chances of its success this time.
OPEC producers have rebuffed requests by the United States and allies to open the oil taps by more than gradual amounts as global consumers emerging from the COVID-19 pandemic and Russia’s invasion of Ukraine keep oil prices boiling.
Some analysts said that rushing a bill through could lead to unintended blowback, including the possibility that other countries could take similar action on the United States for withholding agricultural output to support domestic farming, for example.
“It’s always a bad idea to make policy when you are angry,” said Mark Finley, a fellow in energy and global oil at Rice University’s Baker Institute and former analyst and manager at the Central Intelligence Agency. “OPEC nations could also strike back in other ways,” the analyst said.
The kingdom could also decide to buy at least some weapons from countries other than the United States, hitting a lucrative business for US defence contractors.
In addition, the kingdom and other oil producers could limit US investments in their countries or simply raise their prices for oil sold into the United States – undermining the basic aim of the bill.
API has also come out against the NOPEC bill, saying it could hurt domestic oil and gas producers.
Another industry concern is that NOPEC legislation could ultimately lead to overproduction by OPEC, bringing prices so low that US energy companies will have difficulty boosting output.
Culled from THISDAY