U.S. House Passes Legislation To Sue OPEC Over Oil Price Fixing

Wed. May 21, 2008; Posted: 05:51 AM

(RTTNews) - Tuesday, the U.S. House of Representatives overwhelmingly approved a bill authorizing the federal government to sue OPEC members in U.S. courts for limiting oil supplies and colluding to fix prices, on a day when the price of oil surged to a record above $129 a barrel.

The Democratic-led House passed the Gas Price Relief for Consumers Act of 2008 (HR 6074) bill, piloted by Rep. Steve Kagen's of Wisconsin by 324 to 84 votes. One hundred and three Republicans also supported the bill that would allow the Justice Department Antitrust Task Force to subject OPEC member nations to the same anti-trust laws as U.S. firms face for anti-competitive practices like gas price gouging and market manipulation. The Senate would still have to approve the House measure.

President George Bush has threatened to veto the bill, but the margin of passage in the House suggested Democrats might get a two-thirds majority needed to override any veto. The White House warned against initiating legal action against oil-producing nations arguing that the bill could hurt relations, discourage foreign investment in the U.S. economy, subject U.S. firms abroad to reprisals, and could end up limiting oil supplies, raising prices and threatening U.S. jobs.

In a prepared statement Speaker of the House Nancy Pelosi said, "The House today with a strong bipartisan and veto-proof margin voted to hold foreign oil cartels and Big Oil accountable."

The House Speaker said the Bush Administration should work with the Congress to protect American consumers instead of using a veto threat to shield cartels and Big Oil companies from accountability.

"This bill guarantees that oil prices will reflect supply and demand economic rules, instead of wildly speculative and perhaps illegal activities," Rep. Kagen, who sponsored the bill, said in a prepared statement adding that the legislation will address the loopholes and exemptions that oil companies exploit at the great expense of the people.

The lawmaker further said Americans are at the mercy of OPEC for how much they pay for gasoline, which this week hit a record average of $3.79 a gallon.

"Until we finally have an energy policy other than drill-and-burn, this bill will begin to set things right for the American people," Kagen said while calling upon Americans to think differently including loosening the stranglehold other nations have on the U.S. economy and exploring new forms of energy.

"This legislation will address the loopholes and exemptions that oil companies exploit at the great expense of our citizens," said Kagen.

Democratic White House candidate Hillary Clinton has repeatedly threatened to amend anti-trust law to confront OPEC, and promised to tackle the group through the World Trade Organization-WTO, if elected president.

The Gas Price Relief for Consumers Act of 2008 (H.R. 6074) incorporates the "No Oil Producing and Exporting Cartels Act of 2007" or NOPEC provisions as passed in 2007. NOPEC provisions would empower the attorney general of America to take action against price gouging in the petroleum industry by foreign countries participating in OPEC, the oil cartel that meets regularly to set price and production targets.

The legislation would also authorize the creation of the Department of Justice Petroleum Industry Antitrust Task Force. Among its responsibilities, the Task Force will examine such issues as the existence and effects of price gouging in the sale of gasoline, anticompetitive price discrimination by petroleum refiners, actions to constrain oil supplies in order to inflate prices, and possible oil price manipulation in futures markets.

Finally, the bill requests a Government Accountability Office-GAO study of the effects on competition of prior mergers and divestitures within the petroleum industry.

The Organization of Petroleum Exporting Countries-OPEC comprises Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, Qatar, the United Arab Emirates and Venezuela. The oil cartel produces 40 percent of the world's oil and its exports represent about 65 percent of the oil traded internationally. The United States imports nearly 6 million barrels of crude oil per day from Saudi Arabia and other OPEC countries.

More News: Market Updates | Stock Alerts | All Trading News | Stock Index