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http://www.newsmax.com/headlines/opec_cartel_illegal/2007/11/25/52042.html
If OPEC Is a Cartel, Why Isn't It Illegal?
Sunday, November 25, 2007
In America, cartels - formal agreements among companies to fix prices and
dictate sales rules - are bluntly illegal.
But the world's largest cartel - OPEC, the Organization of Petroleum
Exporting Countries representing 13 major oil producing nations - is not
only recognized as a legal entity, it's protected by U.S. foreign trade
laws.
With oil prices careening toward $100 a barrel, some policy makers are
wondering why the world community, and the U.S. in particular, doesn't
simply declare OPEC illegal.
"We don't have to stand by and watch OPEC dictate the price of gas," says
House Judiciary Chairman John Conyers, D-Mich. "We can do something about
this anti-competitive, anti-consumer behavior."
The idea is not so far fetched. Earlier this year, Congress moved to punish
OPEC as an illegal cartel. But the Bush administration has blocked such
efforts saying they'll only incite retaliation and hurt American businesses.
In May, the House overwhelmingly passed a bill giving the Justice Department
the ability to sue the Middle East-dominated OPEC for collusion and price
fixing. A few weeks later the Senate overwhelmingly passed a comprehensive
energy bill that included similar anti-OPEC provisions.
Now, the House and Senate are trying to finalize that energy bill by year's
end. President Bush, however, has said in no uncertain terms that he'll veto
any energy bill that includes the anti-OPEC language.
Such a law would "encourage retaliation against American businesses abroad,
discourage job-creating investment in the U.S. economy and injure U.S.
relations with other countries," Allan Hubbard, director of President Bush's
National Economic Council, wrote in a letter to House Speaker Nancy Pelosi
last month.
OPEC countries, which include the biggest producers in the Middle East and
Africa as well as Venezuela and Ecuador, produce about 40 percent of the
world's oil will take in some $500 billion in oil revenues this year,
according to U.S. government figures.
The organization was formed in 1960 to give the producers more control over
petroleum prices and production. In the early 1970s, OPEC brought the West
to its knees with oil embargoes. But the group lost clout in the late 1990s,
when oil prices tumbled.
The recent run-up in oil prices has allowed OPEC to reassert itself as a
major force in the oil market, experts note.
A 1979 U.S. District Court decision held that OPEC's pricing decisions are
essentially "governmental" acts of state, as opposed to "commercial" acts,
and thus are beyond the legal reach of U.S. courts thanks to the Foreign
Sovereign Immunity Act of 1976.
The bills in Congress seek to overturn this decision. A similar effort in
2005 failed, however, and insiders say resistance from the Bush
administration makes success for so-called NOPEC efforts unlikely this time
around as well.
"I don't think it will happen with that veto threat," Lucian Puglaresi,
president of the Energy Policy Research Foundation in Washington, tells
Newsmax. "There are so many other controversial issues on energy that it's
too hard to make it part of the package."
He notes that Senate Energy Committee Chairman Jeff Bingaman, D-N.M., and
the committee's ranking Republican Pete Domenici, also from New Mexico, are
united against the idea.
Conyers disagrees. "The Bush administration's threat to veto this bill is
just further proof that the administration favors the international oil
cartel over the American consumer," Conyers tells the Associated Press.
Industry experts, however, largely side with the administration - and with
OEPC.
"It would be silly if it weren't so troubling," Chris Joyner, Washington
representative of the American Petroleum Institute, tells Newsmax. "For
Congress to suggest that foreign governments should be sued for constraining
production is somewhat ironic considering energy bills in Congress would do
that very thing domestically."
The House bill was introduced by Conyers and Sen. Herb Kohl, D-Wisc. Kohl,
lead author of the Senate's energy bill, was instrumental in pushing through
the provision.
Analysts say the anti-OPEC effort is more a matter of political
grandstanding than policymaking.
"People have had their fun, and now it's outta here," Puglaresi says. "It
doesn't generate any new production or lower the price of oil."
With crude oil prices soaring more than 3
If OPEC Is a Cartel, Why Isn't It Illegal?
Sunday, November 25, 2007
In America, cartels - formal agreements among companies to fix prices and
dictate sales rules - are bluntly illegal.
But the world's largest cartel - OPEC, the Organization of Petroleum
Exporting Countries representing 13 major oil producing nations - is not
only recognized as a legal entity, it's protected by U.S. foreign trade
laws.
With oil prices careening toward $100 a barrel, some policy makers are
wondering why the world community, and the U.S. in particular, doesn't
simply declare OPEC illegal.
"We don't have to stand by and watch OPEC dictate the price of gas," says
House Judiciary Chairman John Conyers, D-Mich. "We can do something about
this anti-competitive, anti-consumer behavior."
The idea is not so far fetched. Earlier this year, Congress moved to punish
OPEC as an illegal cartel. But the Bush administration has blocked such
efforts saying they'll only incite retaliation and hurt American businesses.
In May, the House overwhelmingly passed a bill giving the Justice Department
the ability to sue the Middle East-dominated OPEC for collusion and price
fixing. A few weeks later the Senate overwhelmingly passed a comprehensive
energy bill that included similar anti-OPEC provisions.
Now, the House and Senate are trying to finalize that energy bill by year's
end. President Bush, however, has said in no uncertain terms that he'll veto
any energy bill that includes the anti-OPEC language.
Such a law would "encourage retaliation against American businesses abroad,
discourage job-creating investment in the U.S. economy and injure U.S.
relations with other countries," Allan Hubbard, director of President Bush's
National Economic Council, wrote in a letter to House Speaker Nancy Pelosi
last month.
OPEC countries, which include the biggest producers in the Middle East and
Africa as well as Venezuela and Ecuador, produce about 40 percent of the
world's oil will take in some $500 billion in oil revenues this year,
according to U.S. government figures.
The organization was formed in 1960 to give the producers more control over
petroleum prices and production. In the early 1970s, OPEC brought the West
to its knees with oil embargoes. But the group lost clout in the late 1990s,
when oil prices tumbled.
The recent run-up in oil prices has allowed OPEC to reassert itself as a
major force in the oil market, experts note.
A 1979 U.S. District Court decision held that OPEC's pricing decisions are
essentially "governmental" acts of state, as opposed to "commercial" acts,
and thus are beyond the legal reach of U.S. courts thanks to the Foreign
Sovereign Immunity Act of 1976.
The bills in Congress seek to overturn this decision. A similar effort in
2005 failed, however, and insiders say resistance from the Bush
administration makes success for so-called NOPEC efforts unlikely this time
around as well.
"I don't think it will happen with that veto threat," Lucian Puglaresi,
president of the Energy Policy Research Foundation in Washington, tells
Newsmax. "There are so many other controversial issues on energy that it's
too hard to make it part of the package."
He notes that Senate Energy Committee Chairman Jeff Bingaman, D-N.M., and
the committee's ranking Republican Pete Domenici, also from New Mexico, are
united against the idea.
Conyers disagrees. "The Bush administration's threat to veto this bill is
just further proof that the administration favors the international oil
cartel over the American consumer," Conyers tells the Associated Press.
Industry experts, however, largely side with the administration - and with
OEPC.
"It would be silly if it weren't so troubling," Chris Joyner, Washington
representative of the American Petroleum Institute, tells Newsmax. "For
Congress to suggest that foreign governments should be sued for constraining
production is somewhat ironic considering energy bills in Congress would do
that very thing domestically."
The House bill was introduced by Conyers and Sen. Herb Kohl, D-Wisc. Kohl,
lead author of the Senate's energy bill, was instrumental in pushing through
the provision.
Analysts say the anti-OPEC effort is more a matter of political
grandstanding than policymaking.
"People have had their fun, and now it's outta here," Puglaresi says. "It
doesn't generate any new production or lower the price of oil."
With crude oil prices soaring more than 3
