No Oil Producing and Exporting Cartels Act (NOPEC)

July 20, 2018

Americans are all too familiar with sticker shock at the gas pump. How often have we pulled into the gas station only to be dismayed at the cost of filling the tank?

But gas prices don’t have to be as high as they are. In fact, oil prices have been subject to artificial and illegal pricing by OPEC, the Organization of Petroleum Exporting Countries, for decades.

OPEC, an intergovernmental organization of 15 nations, was founded in 1960 with the stated mission of “coordinating” members countries’ production of oil and “stabilizing” oil markets. Accounting for more than 60 percent of the world’s crude oil exports, OPEC essentially coordinates oil production to manipulate prices and supply, driving up fuel costs for millions of consumers across America and the world.

In other words, OPEC functions as a blatant international oil cartel.

For evidence, we need look no further than the 1970s oil embargo, when OPEC slashed oil production and pushed oil prices to record highs. Or more recently, OPEC decided to cut back production at the end of 2016 through 2017, reducing production by a total of nearly 1.8 million barrels per day, and again increasing prices.

The United States has long prohibited price-fixing and market-division conspiracies through our antitrust laws. Over a century ago, Congress passed the Sherman Act to combat the threat posed by anti-competitive cartels.

And due to globalization, many countries have worked on a multinational effort to police cartels, in some cases entering into formal cooperation agreements to combat international price-fixing.

In fact, since 1999 the U.S. Department of Justice has prosecuted many other international cartels involved in the production of rubber chemicals, electrodes, airlines, memory chips and vitamins.

But historically, U.S. courts have not been able to enforce antitrust laws against OPEC, finding that it is protected by sovereign immunity under federal statute and the “Act of State” doctrine.

That is why I have worked with Sens. Chuck Grassley (R-IA), Amy Klobuchar (D-MN), and Patrick Leahy (D-VT) to introduce the No Oil Producing and Exporting Cartels Act, or NOPEC.

Our bill would explicitly authorize the Justice Department to bring lawsuits against oil cartel members for antitrust violations, clarifying that neither sovereign immunity nor the “Act of State” doctrine makes them exempt from the laws regarding illegal coordination and price fixing.

If private companies engaged in the international price-fixing activities that OPEC has, there is no question they would be found guilty of illegal behavior. There is no reason that this cartel should be treated differently based on their connection to national governments.

Our bill would therefore loosen OPEC’s unfair control over our economy, helping restore the principles of fair competition and the free market. And at the end of the day, this will help consumers in America – and across the world – have more affordable access to gas and lessen the expenses of the daily necessities to take care of their families.