Longtime supporters of arming the U.S. with power to sue OPEC for price-fixing may have an opening, though not for the normal reason of high prices.
Congress is looking for ways to punish Saudi Arabia, OPEC’s leading producer, for killing journalist Jamal Khashoggi. Fresh off the Senate rebuking the Trump administration by voting to withdraw support for Saudi Arabia’s war in Yemen, some lawmakers are looking for ways to do more.
“One of the most important U.S. relationships — with Saudi Arabia — is as strained as it’s been in a very long time,” said Jason Bordoff, a former energy adviser to former President Barack Obama, and the director of Columbia University’s Center on Global Energy Policy. “And as Congress looks for ways to continue to condemn what took place, there are a lot of options on the table.”
There are new reasons for Saudi critics to turn up the aggression.
Saudi-led OPEC, with non-member Russia, collaborated last week on a deal to cut oil production by 1.2 million barrels per day in a bid to raise prices, despite protests from Trump.
“Never have the stars aligned so well for this to move forward,” said Michael Cohen, director of energy markets at Barclays. “You have a president who is anti-OPEC, a Congress that sees this as a bipartisan issue, and a scapegoat in OPEC for the Khashoggi issue.”
Some lawmakers are calling on Congress to vote before the holiday recess on legislation, called the No Oil Producing and Exporting Cartels or NOPEC Act, that has been introduced in every Congress over the past 20 years, but never signed into law.
“The fact that OPEC is not being held accountable for its anticompetitive behavior makes a mockery of U.S. antitrust law,” Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, told Makan Delrahim, the antitrust chief for the Trump administration’s Justice Department, during a hearing Wednesday.
Goodlatte went on to criticize the recent OPEC oil cut deal, saying potentially higher prices are “the last thing Americans need around the holidays.”
The House Judiciary Committee has already passed a NOPEC bill that would open up the cartel to antitrust lawsuits, potentially leaving it vulnerable to paying billions of dollars in repatriations.
A companion bill in the Senate was referred to that chamber’s Judiciary Committee in July.
It has been considered a longshot to pass Congress.
Former Presidents George W. Bush and Barack Obama each threatened to veto earlier versions of the bill. Trump, however, supported the strategy in his 2011 book, Time to Get Tough, and has lambasted OPEC on Twitter when oil prices climb.
Timing is a problem for the bill. Congress has few legislative days left this session, and still needs to fund the government. Key backers don’t expect the legislation to be brought up.
The Trump administration has not explicitly endorsed the bill, despite proddings from Goodlatte, who says White House support could enable “a bipartisan victory before this term of Congress ends.”
Delrahim, the Trump Justice Department official, testified Wednesday that the administration is still studying the legislation, even though, as a private sector attorney, he supported the bill.
He did, however, criticize OPEC’s power over oil prices, and said the NOPEC bill would eliminate two hurdles to a federal suit against the cartel.
These hurdles are 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.
But sources close to the White House say Trump is not convinced, for the same reason he is hesitant to punish Saudi Arabia too harshly for the Khashoggi killing.
“The NOPEC bill has no momentum,” said Joseph McMonigle, president of the Abraham Group, a consulting firm, and a former chief of staff of the Energy Department in the George W. Bush administration. “Trump has resisted in order to preserve the strategic relationships with Saudi Arabia and other key countries in the Gulf.”
McMonigle, and other analysts, say Congress also has less incentive nowadays to be angry at OPEC when oil prices rise, because its own record production and exports mean it has growing influence over price, along with OPEC and Russia.
“It’s a totally different era,” McMonigle said. “The calculus is not the same as it was 10 years ago.”
The U.S. energy sector increasingly drives economic growth and jobs, and lower prices could hard the industry, and states that rely on fossil fuel production such as Texas, Oklahoma, Colorado, and North Dakota.
“Consumers are still impacted by OPEC’s actions.” Bordoff said. “But from a macro perspective, the U.S. benefits from price drops and is harmed by price increases much less than in the past.”
Other analysts say the oil market could be become more volatile if the U.S. uses antitrust laws to target sovereign nations.
“OPEC provides the world a valuable service, by balancing supply and demand,” said Jim Krane, energy research fellow at Rice University’s Baker Institute in Houston. “Without OPEC imposing a semblance of order on oil markets, we’d have to endure even more booms and busts.”
But don’t expect the NOPEC bill to die, especially if oil prices rise again, and Democrats upon taking control of the House next month look to continue fingering Trump for his Saudi ties.
“The bill could still make it across the finish line,” said Kevin Book, managing director for research at ClearView Energy.
