The day after the Organization of Petroleum Exporting Countries agreed in early December to cut daily oil output by 1.2 million barrels, prices rose $4.
If it was good news for commodities traders, it was “the last thing Americans need around the holidays,” Rep. Bob Goodlatte, the retiring GOP lawmaker from Virginia, told Makan Delrahim, the antitrust chief for the Trump administration’s Justice Department, during an antitrust subcommittee hearing Wednesday.
“The fact that OPEC is not being held accountable for its anticompetitive behavior makes a mockery of U.S. antitrust law,” he said, urging the Trump administration to back a bill approved by the Judiciary Committee in June that would authorize the Justice Department to sue nations that work together to fix oil prices. A companion bill in the Senate was referred to that chamber’s Judiciary Committee in July.
Former Presidents George W. Bush and Barack Obama each threatened to veto earlier versions of the “No Oil Producing and Exporting Cartels Act of 2018,” better known by its acronym NOPEC. Trump, however, supported the strategy in his 2011 book, Time to Get Tough, and has lambasted OPEC on Twitter when oil prices climb.
“Hopefully, the administration will double down on this and come up with a position in support of the American consumer and making it easier for the antitrust division to take action when there are price-fixing matters going on on a basic commodity that affects the standard of living of virtually every American,” Goodlatte said.
OPEC’s cartel-like behavior costs U.S. drivers an extra $250 billion a year, he estimated, and White House support could enable “a bipartisan victory before this term of Congress ends.” The conclusion of the current term marks the end of GOP control of Congress, with the Democrats wresting back control of the House of Representatives in midterm elections a month ago.
The administration is still studying the most recent proposal, Delrahim replied. The bill would eliminate two hurdles to a federal suit against OPEC, he added: the Foreign Sovereign Immunities Act, which generally exempts foreign nations from the jurisdiction of U.S. courts, and the so-called Act of States doctrine, under which countries typically refrain from interfering in the activities of foreign governments within their own borders.
One point in the bill’s favor is that it leaves the decision on whether and when to file any lawsuit up to the executive branch — an appropriate position given the “foreign policy and diplomatic implications,” Delrahim said.
Whenever “you have free markets determining prices rather than restrictions on output that could potentially raise prices or somehow set the price, it could very well lower prices, ultimately, to the consumer,” he noted.
