On July 1, the members of the Organization of the Petroleum Exporting Countries (OPEC) met at their Vienna headquarters behind closed doors to discuss, coordinate and ultimately collude on oil production levels that have significant consequences on market prices—and ultimately businesses and consumers. These biannual meetings serve to highlight how some of the world’s largest producers, representing approximately 90 percent of global reserves, openly seek to manipulate the price of the world’s most strategically important commodity.
These collusive actions run counter to established international anti-competitive norms, and are in violation of U.S. antitrust law if they were not orchestrated by sovereign states. The Sherman Antitrust Act is legislation designed to promote free and fair competition and ensure that companies no matter where in the world they are located do not collude to price fix prices. Yet OPEC’s national oil companies and their petrostate allies currently evade litigation under this law through a variety of loopholes, including the Act of State doctrine and sovereign immunity.
If enacted, the No Oil Producing and Exporting Cartels Act (NOPEC) would amend the Sherman Antitrust Act by ensuring OPEC and its members can no longer use a sovereign immunity defense or the Act of State doctrine to evade litigation, and it would empower the executive branch (and only the executive branch) to launch such suits if it sees fit. Before becoming President, Donald Trump called for NOPEC’s enactment in his 2011 book “Time to Get Tough.”
Such legislation would benefit U.S. economic and energy security ambitions. Between 1970 and 2015 alone, $3.4 trillion was transferred from the United States to foreign oil producers simply to account for oil price inflation by OPEC. In addition, the U.S. military spends $81 billion every year to secure the global oil supply, ensuring uninterrupted supply of the cartel’s oil to market.
Although OPEC meetings can be tumultuous affairs—last December’s was tense and only yielded a deal in the eleventh hour—this meeting appears to have been decided before the delegates even arrived. Postponed from its usual date in late June, Saudi Arabia and OPEC+ ally Russia arrived at the meeting having already come to an agreement to extend the current curbs of 1.2 million barrels per day for a further six or nine months at the G20 summit in Osaka. Other countries subsequently fell in line behind the two big players in the OPEC+ alliance, with Iranian oil minister Bijan Zanganeh telling reporters in Vienna: “I have no problem with a production cut…”
It seems most likely the cartel will agree to a nine-month accord for these cuts—a timeframe suggested by Russian president Vladimir Putin to Saudi’s Crown Prince Mohammed bin Salman (MBS) at the G20 summit last week. But as the cartel members wrangle over the finer points of the deal—and the larger issue of formalized cooperation with their OPEC+ counterparts—the impact of the pact, sealed by Putin and MBS in Osaka and enacted by oil ministers this week in Vienna, will affect consumers in the United States.
Oil is a uniquely globally-priced commodity: A disruption in supply anywhere in the world affects prices everywhere. As a result, the decisions of the OPEC+ will affect Americans, regardless of how much oil the United States produces. If NOPEC is enacted, the United States would have a tool that could finally offer an answer to decades of uninterrupted anti-competitive behavior at American expense—and bolster U.S. energy security in the process.
Twitter
