DALLAS/WASHINGTON - The U.S. Congress’s latest tilt at OPEC could backfire. The disappearance of a Saudi Arabian journalist is breathing new life into an old bill that would subject the Organization of the Petroleum Exporting Countries to U.S. antitrust law. Influential Republicans and Democrats support it, and it could serve its purpose as a threat. But U.S. producers benefit from OPEC keeping prices up by curbing the oil supply, too.
U.S. policy is already causing problems. The Federal Reserve Bank of Dallas published a survey earlier this month showing that business activity across the energy sector dipped in the third quarter. More than half the responding executives said steel tariffs specifically were a concern. They are adding costs to wells and also affect the construction of pipelines to transport oil, another constraint pushing up the industry’s costs. The majority of executives worry the infrastructure bottleneck won’t be cleared up until late next year or beyond.
Higher prices have kept many U.S. producers afloat. Two years ago OPEC, which accounts for about a third of the oil produced worldwide, agreed to trim output by over 1 million barrels per day, a bit more than 1 percent of global production. Since then, the price of Brent crude is up by three-quarters to around $83 per barrel. Yet the so-called No Oil Producing and Exporting Cartels Act, otherwise known as NOPEC, would make it harder for OPEC to keep supply in check. As well as making oil-output collusion illegal in the United States, the legislation under discussion in the Senate would remove the cartel members’ sovereign immunity in U.S. courts and allow the U.S. attorney general to sue.
Saudi Arabia or other OPEC countries might not abide by any U.S. ruling, but that could make it harder to do business with U.S. companies, for example. The kingdom has hired Ted Olson, a prominent Washington lawyer, suggesting the country is taking the threat seriously. A House committee has already passed NOPEC. U.S. lawmakers are now also demanding answers after Jamal Khashoggi, a journalist, disappeared last week during a visit to a Saudi consulate in Turkey.
A version of the bill has surfaced periodically in Congress since 2000. There’s renewed impetus to make it law – but doing so could have the unintended effect of crimping America’s own energy sector.
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- The No Oil Producing and Exporting Cartels Act is being revived in Congress with a U.S. Senate subcommittee hearing testimony last week. The bill would make oil-production collusion illegal under U.S. antitrust law and revoke the sovereign immunity that would otherwise protect members of the Organization of the Petroleum Exporting Countries from being sued. A version of the bill has been floating in Congress since 2000 and similar plans passed both chambers in 2007 but failed under the threat of a veto by President George W. Bush.
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