[Congressional Record Volume 153, Number 84 (Tuesday, May 22, 2007)]
[House]
[Pages H5556-H5560]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NO OIL PRODUCING AND EXPORTING CARTELS ACT OF 2007
Mr. CONYERS. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 2264) to amend the Sherman Act to make oil-producing and
exporting cartels illegal, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 2264
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``No Oil Producing and
Exporting Cartels Act of 2007'' or ``NOPEC''.
SEC. 2. SHERMAN ACT.
The Sherman Act (15 U.S.C. 1 et seq.) is amended by adding
after section 7 the following:
``Sec. 7A. (a) It shall be illegal and a violation of this
Act for any foreign state, or any instrumentality or agent of
any foreign state, to act collectively or in combination with
any other foreign state, any instrumentality or agent of any
other foreign state, or any other person, whether by cartel
or any other association or form of cooperation or joint
action--
``(1) to limit the production or distribution of oil,
natural gas, or any other petroleum product;
``(2) to set or maintain the price of oil, natural gas, or
any petroleum product; or
``(3) to otherwise take any action in restraint of trade
for oil, natural gas, or any petroleum product;
when such action, combination, or collective action has a
direct, substantial, and reasonably foreseeable effect on the
market, supply, price, or distribution of oil, natural gas,
or other petroleum product in the United States.
``(b) A foreign state engaged in conduct in violation of
subsection (a) shall not be immune under the doctrine of
sovereign immunity from the jurisdiction or judgments of the
courts of the United States in any action brought to enforce
this section.
``(c) No court of the United States shall decline, based on
the act of state doctrine, to make a determination on the
merits in an action brought under this section.
``(d) The Attorney General of the United States may bring
an action to enforce this section in any district court of
the United States as provided under the antitrust laws.''.
SEC. 3. SOVEREIGN IMMUNITY.
Section 1605(a) of title 28, United States Code, is
amended--
(1) in paragraph (6), by striking ``or'' after the
semicolon;
[[Page H5557]]
(2) in paragraph (7), by striking the period and inserting
``; or''; and
(3) by adding at the end the following:
``(8) in which the action is brought under section 7A of
the Sherman Act.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Michigan (Mr. Conyers) and the gentleman from Florida (Mr. Keller) each
will control 20 minutes.
The Chair recognizes the gentleman from Michigan.
General Leave
Mr. CONYERS. Mr. Speaker, I ask unanimous consent that all Members
have 5 legislative days within which to revise and extend their remarks
and include extraneous material on the bill now under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Michigan?
There was no objection.
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, gas prices have now reached an all-time record high,
topping even the 1981 spike in price that had stood as the record high
for 26 years. According to the Energy Information Administration, the
nationwide price of unleaded regular gas hit $3.22 a gallon, 11.5 cents
higher than last week's price. In Michigan, it is even higher than
that.
Today's record-breaking price, one in an unending series of
continuous price hikes over the past month, is hurting Americans in
their pocketbooks, and we have got to do something about it. Retailers
across the Nation are saying that soaring gas prices are prompting
consumers to cut back on their shopping trips and their purchases.
We are told this won't be the end of these skyrocketing price hikes
either. The AAA forecasts that more record prices are probably on the
way, especially as the summer begins, which is usually the busiest
driving season of the year.
In Michigan, gas prices have reached their highest levels ever at
$3.27 a gallon. Michigan is now the third most expensive State for
gasoline in the country, behind California and the State of Illinois.
Last week, in an effort to help address this crisis, the House
Judiciary Committee's Antitrust Task Force examined the OPEC cartel and
its impact on the price of gas. OPEC accounts for two-thirds of the
world's oil reserves and more than 40 percent of the world's oil
production, but, even more significantly, OPEC oil exports represent 70
percent of all the oil traded internationally.
You know what that means. This affords OPEC, obviously, considerable
control over the global market. Its net oil export revenues should
reach nearly $395 billion in this year alone, and its influence on the
oil market is dominant, especially when it decides to increase or
reduce the levels of production.
For years now, OPEC's price-fixing conspiracy, and that is what I
call it, a conspiracy, has unfairly driven up the price and cost of
imported crude oil to satisfy the greed of oil exporters. We have long
decried OPEC, but, sadly, the administration has done little or nothing
to stop this.
So now the time has come. It is time for us to do something to point
them in the right direction. We have got to get ahold of this economic
crisis. The cries are rising up in every congressional district in the
Nation, so your Committee on the Judiciary has produced H.R. 2264, with
the help of Mr. Chabot and Mr. Keller and other Members, to make clear
that the oil cartel nations that are colluding to limit crude oil
production as a means of fixing its price is illegal under United
States law, just as it would be for any company engaging in the same
conduct.
{time} 1230
It clarifies and reaffirms the law in several critical respects:
First, it exempts OPEC and other nations from the provisions of the
Foreign Sovereign Immunities Act to the extent those governments are
engaged in price fixing and other anticompetitive activities.
Second, H.R. 2264 makes clear that the so-called ``act of state''
doctrine does not in any way prevent courts from ruling on antitrust
charges brought against foreign governments, and that foreign
governments are ``persons'' subject to suit under the antitrust laws.
Third, it explicitly authorizes the Department of Justice to bring
lawsuits in Federal court against oil cartel members.
Ladies and gentlemen, we, on behalf of the American people, have had
enough. These price rises are not something that we have to merely
humbly drive into the gas station and look at the new, increased cost.
We don't have to stand by and watch OPEC dictate the price of our gas
without any recourse whatsoever. We can do something about it to combat
this blatantly anticompetitive, anticonsumer behavior, and we are.
I urge Members to carefully consider the legislation that is now
being debated on the House floor.
Mr. Speaker, I reserve the balance of my time.
Mr. KELLER of Florida. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, it is painfully obvious to the American people that the
price of gasoline is going up. The nationwide average for regular,
unleaded gas is at a record $3.20 a gallon, according to AAA, up almost
34 cents from a month ago, and the peak summer driving season hasn't
even started yet. The American people are mad as heck, and they don't
want to take it anymore.
To heck with OPEC. How about NOPEC? That's what this legislation is
all about.
Last week, the Antitrust Task Force of the House Judiciary Committee,
on which I serve, held a hearing on prices at the pump, market failure,
and the oil industry. The experts at this hearing, including the
Connecticut attorney general, Mr. Blumenthal, insisted we do something
about the OPEC cartel.
The price of gasoline at the pump closely tracks the price of a
barrel of oil on the world oil market. That is because the price of
crude oil comprises 56 percent of the cost of a gallon of gasoline.
American refineries, which import over 60 percent of their oil from
foreign countries, compete for those oil resources with China and
India. Demand for oil in those two countries has dramatically increased
in recent years. As the demand has increased at home and abroad,
supplies have not kept up and the price of oil has gone up.
Complicating this problem is the fact that we haven't built a
refinery in this country in 30 years. And recent, unexpected refinery
shutdowns have constricted supply. Of course, there are also
anticompetitive forces in play that manipulate the law of supply and
demand to their selfish benefit and our detriment.
For example, the world oil price is dictated mainly by the quantity
of oil that the Organization of Petroleum Exporting Countries, or OPEC,
is willing to supply. The 11 current OPEC members account for 40
percent of the world oil production and about two-thirds of the world's
proven oil reserves. Most would argue that the presence of this cartel,
controlled in large part by totalitarian or hostile regimes like Iran
and Venezuela, is not helpful.
The question is: What can Congress do about it? NOPEC is one possible
solution to this problem. Because of the ``act of state'' doctrine and
the concept of sovereign immunity, Americans are precluded from suing
the cartel that controls a good portion of the world's oil supply. This
bill would change that.
Under this NOPEC legislation, the U.S. Attorney General would be
allowed to bring an antitrust lawsuit against the oil cartel members
for collusion, price fixing, and other anticompetitive activities
designed to gouge American consumers.
I want to thank the gentleman from Ohio (Mr. Chabot), the gentleman
from Michigan (Mr. Conyers) and the gentlewoman from California (Ms.
Zoe Lofgren) for their leadership on this NOPEC legislation.
I would point out, in the interest of straight talk, that the White
House this morning issued a statement saying that the President will
veto the NOPEC legislation. I would point out that they misspelled the
word ``President'' in this release; President is spelled P-R-E-S-E-N-T.
Apparently, the White House cares even less about spell-check than they
do about OPEC with regard to this matter.
I would urge my colleagues on both sides of the aisle to do something
about OPEC's price fixing misbehavior and vote ``yes'' on H.R. 2264.
[[Page H5558]]
Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. Mr. Speaker, I yield such time as she may consume to the
gentlewoman from California (Ms. Zoe Lofgren) whose State has been most
affected by the subject matter we are here on the floor considering.
Ms. ZOE LOFGREN of California. Mr. Speaker, I am pleased to be a
cosponsor of this important bill and believe it is sound legislation
that the House should adopt today.
If private actors collusively controlled supply and prices in the
manner that OPEC member nations do, there is no question that their
conduct would be illegal as a per se violation of the Sherman Act, and
they would be subject to criminal and civil liability. Typically,
however, foreign states are immune from suit in Federal court. Section
1604 of title 28 of the United States Code provides that a foreign
state shall be immune from the jurisdiction of the courts of the United
States and of the States, with some specific exceptions. One exception
is where the suit is based upon a commercial activity carried on in the
United States by the foreign state, or upon an act performed in the
United States in connection with a commercial activity of the foreign
state elsewhere, or upon an act outside of the territory of the United
States in connection with a commercial activity of the foreign state
elsewhere and that causes a direct effect in the United States.
I think it is quite clear that the OPEC collusion falls within the
current exception.
So why is this bill, this law, necessary? A district court has held
otherwise, and it is important that the Congress reaffirm that the
antitrust laws do indeed apply to OPEC nations in their role as
commercial actors engaging in such collusion where such conduct impacts
the United States.
Another obstacle to antitrust lawsuits against OPEC is the so-called
``act of state'' doctrine which has been used by the Ninth Circuit in
affirming the dismissal of the case that was wrongly decided.
H.R. 2264 minimizes any ``act of state'' doctrine concerns by making
sure and entrusting to the executive branch the discretion whether to
bring charges under this provision. A court's concern about any
insinuation of itself into matters properly within the bailiwick of the
political branches is mitigated when Congress, by this legislation, and
the executive branch, by bringing the action, explicitly authorize
judicial involvement.
Much has been said about the price of gas today. It is high, and I
think we all hear from our constituents about it. But there is another
reason why manipulation of the market is bad for America. We know that
for our long-term future we have to develop energy alternatives. We
cannot continue to drill and continue to be dependent upon the Middle
East for oil.
So long as it is possible for OPEC to manipulate rapidly the price of
crude, they have it within their power to really destroy markets for
alternative energy, and therefore, make it even harder for us to escape
from the oily grasp of OPEC.
We need to make sure that these misdeeds are prevented by adopting
this legislation. This is a good bill for consumers, for people in
California that are complaining about the cost of gas. It is a good
bill for those who want to move away from oil to alternative energies
and who need to avoid the manipulation of the market by OPEC that for
many years has kept us from that goal.
I hope that this bill, which is an important first step, will not be
vetoed by the President. I think it would be a shame if he were to
prevent this relief for the traveling public, and also this hope for
those of us who want to fight global climate change through the use and
development of alternative energy sources.
I thank the gentleman for recognizing me.
Mr. KELLER of Florida. Mr. Speaker, I yield such time as he may
consume to the gentleman from Ohio (Mr. Chabot) who is the lead
Republican cosponsor of NOPEC and has worked hard on this legislation
for 3 years.
Mr. CHABOT. I thank the gentleman for yielding.
Mr. Speaker, I rise in strong support of H.R. 2264, the No Oil
Producing and Exporting Cartels Act of 2007.
First, I would like to thank the distinguished gentleman from
Michigan, Chairman Conyers, for his hard work and his leadership on
this bill. We have worked together in previous Congresses to move this
bill, and I am very pleased to see it moving on the floor here today.
I also want to thank the gentlewoman from California (Ms. Zoe
Lofgren) and the gentleman from Florida (Mr. Keller) for their
leadership in supporting the passage of this legislation as well.
Since last week when we first considered this bill, gas prices have
increased another 10 cents to a record level in this country of over
$3.27 a gallon. Before heading to the airport to come back here from my
district in Cincinnati, just yesterday, I filled up in my 1993 Buick
and it was $3.19 in Cincinnati by the University of Cincinnati, $32.
And my constituents back home in Cincinnati are very concerned, and
rightly so, particularly as we enter the peak summer driving season,
which begins this weekend.
I happen to have a tele-town hall meeting where hundreds and
hundreds, probably thousands of people in my district were on the line
and we were talking about a range of issues, this issue, high gas
prices in my district. And as Chairman Conyers mentioned, the State of
Michigan has the highest in the whole country. People are really
concerned about this; this is really hitting hard and it is something
that we need to deal with in this Congress.
I am very disappointed in the President that this message indicates,
whether or not they know how to spell the word ``President,'' that they
are going to veto this bill if it is passed. I think we ought to send
it to the President and let the chips fall where they may. This is long
overdue legislation. I urge its passage.
The other issue, by the way, which was of great interest to my
constituents last night in the tele-town hall meeting was, not
surprisingly, the immigration issue. We heard the Senate reached an
agreement just recently on, in my view, an extremely flawed agreement
which is going to be debated over there and then debated over here.
Those are the two principal issues my people back in Cincinnati are
concerned about.
These continued price hikes take their toll on consumers directly at
the gas pump, as well as impacting their everyday lives and raising the
cost of things like going to the grocery store or going to work or even
planning a vacation. I mean, this is the time when people are deciding
whether they are going to take the kids to King's Island up the road
from my district in Cincinnati, or if they are going to go to Disney
World down in Florida in Mr. Keller's area. But when you have gas
prices at $3.20-plus per gallon, this is not only going to put a damper
on vacation and disappointing our kids, but it is significantly going
to weigh down this economy.
I think there is no question that if gas prices remain this high, it
is going to have a significant impact on the economy. Jobs and other
things are at risk.
Passing H.R. 2264 would be a positive first step to allaying concerns
that the American public has expressed about these uncontrollable price
surges. Over the last decade, it has become alarmingly clear that
America is far too dependent on foreign oil to meet our energy needs.
Disturbingly, we import, as some of my colleagues have mentioned, more
than two-thirds of the oil we consume, much of it from OPEC, and much
of it from some of the more unstable areas of the world--Iran, Iraq,
Saudi Arabia, Kuwait, the United Arab Emirates, and of course we get
some from Nigeria and Venezuela. As Mr. Keller mentioned, we have down
there Mr. Chavez who seems to be following in the footsteps of Fidel
Castro. Those are the types of countries that we are depending on for
our oil, and that has to change.
At the same time the number of refineries operating in the United
States has decreased from over 300, 324 to be exact back in 1981, to
fewer than 150, 148 to be exact. So we have cut the number of
refineries available in half over that period of time, and we haven't
built another oil refinery since 1976, over 30 years ago now.
There is no doubt that we need to focus on both short-term and long-
term
[[Page H5559]]
strategies to address these issues. We need increased domestic
production and refining capabilities, and we need to put a stronger
emphasis on alternative energy and conservation efforts.
{time} 1245
But this strategy to make us less oil-dependent and to put us on more
sound footing also has to include breaking up the cartels that play a
primary role in manipulating, and I emphasize manipulating, the market.
We talk about supply and demand and all that, but OPEC countries are
manipulating the supply of oil in the world.
For decades, OPEC nations have conspired, and again I emphasize that,
conspired to limit supplies and to drive up prices of imported crude
oil, gouging American consumers, in violation of our Nation's antitrust
laws. OPEC accounts for more than two-thirds of the global oil
production and exports more than 65 percent of the oil traded
internationally. Thus, it's abundantly clear that OPEC's influence in
the market dominates.
H.R. 2264, as some of my colleagues have already mentioned, attempts
to break up this cartel and subject these colluders and their
anticompetitive practices to the antitrust scrutiny that they so richly
deserve. Specifically, this bill would amend the Sherman Act to make it
illegal for foreign countries to collude, to restrain output or fix
prices of oil, gas or any petroleum product. In addition, this bill
gives the Attorney General the authority to enforce the antitrust
provisions against these nations.
Importantly, the bill also anticipates any protected nation defense
or immunity that OPEC nations may proffer, specifically exempting them
from the Foreign Sovereignty Immunities Act if they are engaged in
price fixing, which they clearly are, or other anticompetitive
activities with regard to pricing or production or distribution.
This bill is a necessary and appropriate response to deal with those
who are not willing to deal fairly with the American consumer. I urge
my colleagues to support competition and consumers by supporting H.R.
2264.
And I want to again thank Mr. Conyers for his leadership in this
area. It's far overdue that we pass this act.
Mr. CONYERS. Mr. Speaker, I yield such time as she may consume to the
distinguished Judiciary member from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Speaker, first of all, I want to thank
Chairman Conyers for doing something and looking at this from a
perspective that is thoughtful, that is embracing and that recognizes
the largeness of this issue.
Might I just recount for my colleagues that this is a bipartisan
bill. Many people have come to the floor of the House or in the
Judiciary Committee, some are on Science, some are on Energy and
Commerce, but all of them have faced what I face, being stopped in the
airport by airport workers, individuals who are hourly wages, and they
simply say, we can't take it anymore. As I got on the plane, their last
word was, can you do something about the gasoline prices? Today in
America, gasoline prices are over $3.20 a gallon--enough is enough!
As we enter into the summer, we are being told that it's going to get
worse, higher and higher and higher. The distinguished Speaker said the
gentlewoman from Texas. I represent what is known as the energy capital
of the world, and what I would encourage the particular companies that
I have the privilege of representing, and I have in essence probably
voted differently from many in this House in supporting the Energy
Policy Act and a number of initiatives that were supposed to help us
diversify or help enhance the capacity of our particular companies.
They were supposed to help build refinery capacity, which I will tell
you is an issue. I was supposed to applaud offshore development in
certain areas if it was environmentally safe. We've tried to do
everything in order to ensure that we have a strong industry, but that
we provide for those who are in need.
This legislation simply gives the Attorney General the authority to
find out about an organization. Many of us have friends that happen to
be from these particular nations. We are supportive of the engagement
of these particular nations in the Mideast. We work with them. We've
traveled there. We encourage engagement on the State Department level.
We want to be friends, but there has to be a question of whether or not
OPEC provides itself insulated against antitrust violations such that
they can gouge or raise prices without any recrimination.
This is a thoughtful legislative initiative that gives the Attorney
General of the United States the ability to review whether or not this
entity violates the antitrust laws.
You must understand that when the oil comes to the United States,
even though we may be operators in those foreign countries, some of the
named companies that you know, some of the ones that you pull up to the
station, the OPEC sets the prices, and therefore, they look at the
marketplace to determine how much money they can get out of a suffering
Nation or suffering world.
As you well know, one of our trade deficit partners, China, is
consuming more oil than one might imagine. That bumps the price up. And
who is the victim? The hardworking citizens in this country, whether
they live in Houston, Detroit or New York, or whether they are simply
trying to get little ones to soccer teams, to after-school programs or
to their religious institution. Nobody can get anywhere because of the
price.
So I simply, as I draw to a close, want to be able to cite from the
report language of this bill: ``With control of 40 percent of the
world's production, OPEC has substantial influences over the price of
oil. OPEC member nations have extensive oil reserves and therefore can
readily increase supply and lower prices.'' That means the OPEC can act
for the greater good if they desire to do so.
I think that's simple enough to understand. They can increase supply,
they can lower prices, but they're not doing it.
So I would ask my colleagues from all parts of the country to be
sympathetic to vacationers, people trying to get to hospitals, mothers
and fathers taking children to various places, elderly trying to get to
the places of worship, where they go. Just the sheer operation of
America is dependent on what we do here today. I can't go home, and I
imagine none of you can, without saying we tried to do something.
I close simply by an oral letter to my constituents. You might think
that you can ride this out, those of you who are the named and
successful operators of our energy industry in the United States. We
encourage you, you are American, you have jobs, you are the engine of
the economy. We're not your enemy. We are your supporters, but we have
to work for the consumers. Come out in the open. Encourage a roundtable
of discussion. Let the CEOs of the major companies sit in a roundtable
discussion and discuss with the American people why we have this
increasing and burdensome cost of gasoline.
Look closely at the legislation that is before us and recognize that
it is a valuable piece of legislation that gives authority just for the
thoughtful review of how we can do better.
I ask my colleagues to support this particular legislation, H.R.
2264, that, in fact, is an answer to this constant question, what are
we going to do about gasoline prices? As Members of the United States
Congress, it is imperative that we act. We have to do more. This is a
thoughtful piece of legislation that frames the question whether or not
a sovereign nation is protected against antitrust violations that
impact negatively on the consumer in the United States of America. We
have to do this, and we have to do more.
I thank the gentleman from Detroit, from Michigan, the distinguished
chairman of the Judiciary Committee, for yielding to this grounded
representative of the energy industry in Houston, Texas, who wants to
work collectively to get something done for the people of the United
States.
Mr. KELLER of Florida. Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. How much time remains, Mr. Speaker?
The SPEAKER pro tempore (Mr. Berman). The gentleman from Michigan has
3\1/2\ minutes remaining.
Mr. CONYERS. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from New York (Mr. Bishop).
Mr. BISHOP of New York. Mr. Speaker, I thank the chairman for
yielding.
[[Page H5560]]
I rise in support of H.R. 2264. As I drive around eastern Long
Island, an area that is heavily dependent on its economic stability on
travel and tourism, it is all too common to see gas prices as high as
$3.30 a gallon. I'm reminded of how few influences beyond our shores
affect our economic prosperity as much as the supply of oil.
The disappointment we share after 6\1/2\ years of failed foreign and
energy policies is matched by our frustration that price gouging by oil
and gas companies, as well as collusion among foreign governments to
restrict the flow of oil to the United States, continue unchecked.
As Thomas Friedman has written in the New York Times, we can't have
an effective, forward-looking foreign policy toward the Middle East
without a serious energy policy to reduce our dependence on foreign
oil. This bill, which empowers the U.S. to legally challenge foreign
collusion resulting in price spikes, is a good first step towards that
goal.
One of the first resolutions I introduced called on the President to
demand OPEC boost oil production, which was also included in the
Democratic substitute I was proud to offer to the Energy Policy Act of
2005. Despite a wave of record gas prices that summer, President Bush
and the then-majority ignored that call.
Consequently, the surging price of gas continues to hit middle-class
families hard while we wait for the administration to produce a foreign
and energy policy that finally shrinks our reliance on foreign oil and
vulnerability to the whims of oil cartels.
Mr. KELLER of Florida. Mr. Speaker, I'm prepared to close.
Let me just say this. Gas prices are at a record high, and Hugo
Chavez is laughing all the way to the bank. Coddling and jawboning
leaders like Mr. Chavez of Venezuela has not worked. If you are serious
about doing something about OPEC's price-fixing misbehavior, then
please vote ``yes'' on NOPEC and allow us to bring antitrust lawsuits
against these oil cartel members for collusion, price fixing and other
anticompetitive activities that continue to gouge American consumers.
Mr. Speaker, I urge my colleagues to vote ``yes'' on NOPEC.
Mr. Speaker, I yield back the balance of my time.
Mr. CONYERS. Mr. Speaker, may I close with this observation. It was
in 1978 that the International Association of Machinists and Aerospace
Workers sued OPEC under the Sherman Antitrust Act, but the case was
rejected because the Court said that OPEC could not be prosecuted under
the Sherman Act due to the foreign sovereign immunity protection clause
it claimed for its member states.
I'm here to announce on the floor, as modestly as I can, that that
decision was in error. Government-owned companies that engage in purely
business activities do not warrant sovereign immunity protection
according to prevailing legal doctrines, and so what we do in this
measure is that we don't start a lawsuit against OPEC. We merely
authorize for the first time by law the Department of Justice to, when
in their good judgment they choose to be able to do that.
These high prices facilitated by OPEC serve to transfer wealth from
Western consumers to petroleum producers, and I have this on the very
conservative words of the Heritage Foundation itself. I will insert
this in the Record at this point.
[From The Heritage Foundation, May 21, 2007]
Time for Congress To Lift OPEC's Immunity
(By Ariel Cohen)
This week, the House is likely to pass the No Oil Producing
and Exporting Cartels Act of 2007 (NOPEC, H.R. 2264). This
bill, sponsored by Representatives John Conyers (D-MI) and
Steve Chabot (R-OH), would allow the federal government to
sue the Organization for Petroleum Exporting States (OPEC)
for antitrust violations. Similar legislation (S. 879) is
pending in the Senate, sponsored by Senators Herb Kohl (D-WI)
and Arlen Spector (R-PA). At a time when oil prices are
climbing to ever-higher levels, fighting OPEC's
anticompetitive practices would be a welcome first step
towards reestablishing the free market in this strategically
important sector. This is long overdue and points the way
toward a second step: allowing private antitrust suits
against OPEC.
The Intolerable Status Quo. Since its inception in 1960,
OPEC, which is dominated by Persian Gulf producers, has
successfully restricted its member states' petroleum
production, artificially distorting the world's oil supply to
line its members' pockets. Member states' production quotas
are determined at semi-annual meetings of members' petroleum
ministers and are at times changed through telephone
consultations. Several times, this supply-fixing strategy has
brought devastation to the U.S. and global economies:
In 1973, OPEC's actions in response to U.S. support for
Israel, which was attacked in the Yom Kippur War, resulted in
a worldwide economic recession that lasted from 1974 to 1980.
In 1980, OPEC's failure to increase production in the face
of the Iranian revolution resulted in historically high oil
prices of $81 per barrel (in 2005 dollars).
In 1990, OPEC refused to increase production sufficiently
to keep prices stable as Saddam Hussein occupied Kuwait.
Lately, OPEC's resistance to add productive capacity has
sent oil prices to $70 a barrel, once again endangering
economic growth worldwide.
The cartel's operations ensure that its members' oil and
gas economies remain insulated from foreign investment flows.
Members of OPEC have not worked to enhance the rule of law
and property rights and have imposed severe restrictions to
prevent foreign investors from owning upstream production
assets (oil fields and pipelines). This is a testament to the
cartel's de facto monopoly over the petroleum market. Indeed,
the only serious challenge to the organization came in 1978
when a U.S. non-profit labor association, the International
Association of Machinists and Aerospace Workers (IAM), sued
OPEC under the Sherman Antitrust Act, in IAM v. OPEC. But the
case was rejected in 1981 by the U.S. Court of Appeals for
the Ninth Circuit. OPEC, the court affirmed, could not be
prosecuted under the Sherman Act due to the foreign sovereign
immunity protection it claimed for its member states.
That decision was wrong. Government-owned companies that
engage in purely business activities do not warrant sovereign
immunity protection according to prevailing legal doctrines.
High oil prices, which OPEC facilitates, serve to transfer
wealth from Western consumers to petroleum producers. This
wealth transfer funds terrorism through individual oil wealth
and government-controlled ``non-profit'' foundations. It also
permits hundreds of millions of dollars to be spent on
radical Islamist education in madrassahs (Islamic religious
academies).
Furthermore, the oil-cash glut in the Gulf states and
elsewhere empowers resistance to much-needed economic reform
in oil-producing countries. State subsidies for everything
from health care to industry to bloated bureaucracy continue
unabated, funded by Western consumers.
Congress Gets Into Action. Growing concerns over energy
prices have prompted Congress to examine the legal hurdles
that prevent the United States from defending its economic
and national security interests.
In the early part of 2005, a group of senators led by
Senator Mike DeWine (R-OH) introduced the ``No Oil Producing
and Exporting Cartels Act'' (S. 555), known as NOPEC, to
amend the Sherman Act to make oil-producing and exporting
cartels illegal.
The bill has now returned the Senate calendar. The House
and Senate now have a unique opportunity to:
Join forces in defending American businesses and consumers.
NOPEC would send a strong and long-overdue signal to OPEC oil
barons that they must stop limiting production and investment
access.
Allow private suits against OPEC. If OPEC is to be reined
in, individuals and companies that it has damaged must also
be allowed to bring suits against the cartel. As the
International Association of Machinists (IAM) v. OPEC made
clear, Congress must amend the Sherman Act to allow these
suits. Reform should not begin and with the DeWine-Kohl
legislation.
Conclusion. The No Oil Producing and Exporting Cartels Act
of 2007 would place much needed pressure on OPEC. It is time
for the cartel to cease its monopolistic practices. Otherwise
the American People can expect more of the same from OPEC--
insufficient production and higher energy bills.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Michigan (Mr. Conyers) that the House suspend the rules
and pass the bill, H.R. 2264, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. CONYERS. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this question will
be postponed.
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