Congress sees unprecedented opportunity to confront OPEC

For the first time since OPEC’s formation, both the White House and Congress appear to be on the same page when it comes to suing the oil cartel for violating the US antitrust law.

al-monitor The logo of the Organization of the Petroleum Exporting Countries (OPEC) is seen outside their headquarters in Vienna, Austria, Dec. 7, 2018.  Photo by REUTERS/Leonhard Foeger.
Bryant Harris

Bryant Harris

@brykharris_ALM

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Oil and gas

Dec 14, 2018

Long a political punching bag, the OPEC oil cartel could soon find itself in the unenviable position of fending off US antitrust lawsuits — thanks to an unprecedented convergence of views between the White House and Congress.

Congress has attempted to pass the bipartisan No Oil Producing and Exporting Cartels Act — nicknamed NOPEC — since 2000, only to have its efforts repeatedly stymied by the George W. Bush and Barack Obama administrations.

But President Donald Trump’s endorsement of the bill, coupled with a supportive official overseeing the Justice Department’s antitrust division, could mean that the bill now has an actual shot at becoming law. Should that happen, it would threaten US allies and adversaries alike with a wide array of trust-busting lawsuits by stripping them of protection under the Foreign Sovereign Immunities Act.

Following testimony before a House Judiciary panel on Wednesday, Assistant Attorney General Makan Delrahim hinted that he supports the bill’s underlying objectives.

“The administration continues to review the underlying legislation,” Delrahim, who oversees the Justice Department’s antitrust division, told Al-Monitor. “But I share the sentiments, the vision, as well as the administration,” he added.

As a lawyer in private practice, Delrahim penned a 2008 op-ed in The Hill calling on Congress to pass NOPEC. In it, he argued that “the time has come for American policymakers to revoke OPEC’s license to disregard our antitrust law and finally let the free market determine the price of a barrel of oil.”

Clearly worried about the prospect of the long-dormant bill finally becoming law, Saudi Arabia hired Republican super-lawyer Ted Olson in September to lobby against it. But Olson dropped the Saudis barely a month later amid the backlash over the murder of Saudi journalist Jamal Khashoggi.

Delrahim’s remarks came after House Judiciary Committee Chairman Bob Goodlatte, R-Va., asked the Trump administration to endorse NOPEC during Wednesday’s hearing.

“It is estimated that OPEC’s cartel behavior currently costs US consumers as much as an extra $250 billion per year,” said Goodlatte, adding, “The fact that OPEC is not being held accountable for its anticompetitive behavior makes a mockery of US antitrust law.”

Although the House Judiciary Committee unanimously advanced the bill in June, Congress’ packed end-of-year schedule virtually ensures that the bill will not receive a floor vote unless it’s attached to must-pass legislation.

But backing from Trump himself could ensure that Congress acts on the bill next year. Trump explicitly endorsed NOPEC legislation in his 2011 book, “Time to Get Tough: Making America #1 Again.” While in office, Trump has repeatedly assailed OPEC’s “artificially very high” oil prices both on Twitter and in foreign policy addresses.

Obama voted for NOPEC as a senator only to oppose it as president. But Senate Judiciary Committee Chuck Grassley, R-Iowa, still believes that Trump’s previous comments present an unprecedented opportunity to pass the bill.

“It’s been helpful because the president wants it now,” Grassley told reporters this week. “First time we’ve ever had a president speak in favor of it. We haven’t talked about NOPEC for the last 15 or 20 years.”

Speaking before the UN General Assembly in September, Trump stated that “OPEC — and OPEC nations — are as usual ripping off the rest of the world.” He went on to take a thinly veiled swipe at the United States’ Gulf allies, claiming, “We defend many of these nations for nothing.”

Although Saudi Arabia increased oil output earlier this year to offset price increases resulting from renewed US sanctions on Iran, OPEC and Russia reached an agreement last week to cut oil production by 1.2 million barrels per day.

The recent anti-Saudi Arabia backlash on Capitol Hill, culminating in this week’s Senate vote to end US support for Riyadh’s war against Yemen’s Iran-backed Houthi rebels, could further rally lawmakers around the bill. The fact that Saudi archrival Iran is also an OPEC member could provide a convenient avenue for lawmakers to punish both countries.