Members of Congress are attempting to pass a law to revoke sovereign immunity from member states of the Organization of the Petroleum Exporting Countries (OPEC). Economists at ZeroHedge say such a bill could pave the way for lawsuits against OPEC countries for “market manipulation,” potentially leading to higher production and lower costs for oil. In the past, protections afforded by the OPEC’s sovereign immunity have limited the number of court cases brought against these countries.
After the start of the Russian-Ukrainian conflict, the U.S. banned oil from Russia, adding to the already drastic rise in gas prices. According to AAA, as of May 16, the average price for a gallon of gasoline in the United States was $4.48, up from $3.04 one year ago.
Brent Bennett, policy director for the Life:Powered initiative told The Dallas Express, “Global energy markets are highly liquid and competitive, and OPEC is the only entity large enough to have any effect on commodity prices.”
The U.S. asked the OPEC to increase production to combat rising prices, but OPEC nations are sticking to an existing deal with Russia to raise output only marginally.
The “No Oil Producing and Exporting Cartels” (NOPEC) Bill is the latest attempt to remove OPEC’s sovereign immunity. The Senate Judiciary Committee passed the bipartisan bill, sponsored by Senator Chuck Grassley, 17-4. The bill will now be debated on the Senate Floor.
Similar legislation has been passed by Government Committees before, but previous presidents have opposed attempts to introduce NOPEC-style bills into law. President Biden has yet to comment on the proposed legislation.
White House Press Secretary Jen Psaki provided the following statement:
“I don’t have an official position on this legislation right now, but we do believe that this potential — the potential implications and unintended consequences of this legislation require further study and deliberation, particularly during this dynamic moment in the global energy markets brought about by President Putin’s invasion of Ukraine.”
Former Presidents George W. Bush and Barack Obama publicly opposed any past attempts at a NOPEC Bill, threatening to veto any such legislation.
The bipartisan nature of the NOPEC bill sets it apart from its predecessors. The bill was sponsored by Republican Chuck Grassley and co-sponsored by Senators Amy Klobuchar (D-MN), Mike Lee (R-UT), and Patrick Leahy (D-VT).
All three co-sponsors cited “competition” as necessary for fair prices and the motivation for their support of this bill.
The American Petroleum Institute (API), a powerful oil lobbying group, spoke out against such legislation in the past.
In 2019, API told the Senate and House Judiciary Committees, “We see this legislation as creating significant detrimental exposure to U.S. diplomatic, military, and business interests while having limited impact on the market concerns driving the legislation.”
The United Arab Emirates energy minister, Suhail al-Mazrouei, called for calm during the debate on the NOPEC bill. At a conference in Abu Dhabi, he warned that passing such legislation could cause prices to skyrocket even further.
“The last thing we want is someone trying to hinder that system,” al-Mazouei said. “If you hinder that system, you need to watch what you’re asking for because having a chaotic market; you would see … a 200% or 300% increase in the prices that the world cannot handle.”
