OPEC spans the globe.
With the market price of West Texas Intermediate crude oil hovering just above $125 a barrel and regular gasoline prices spiking above $4.00 a gallon, your ordinary American citizen wants to know who to blame. Count Blawgletter as one of them.
We can speculate about causes. Does the lack of new refineries in the U.S. explain the price inflation? If so, can’t we blame environmental extremism (and federal law) for making the cost of anti-pollution measures prohibitively expensive? Nah. According to the Energy Information Administration, which uses government data, domestic refineries ran at 83.2 to 88.9 percent between October 2007 and March 2008.
What about Big Oil? In the fourth quarter of 2007 and the first three months of 2008, Exxon Mobil alone raked in net income of $22.6 billion. Do you think it earned all that strictly through hard work and clever management? Probably not all. Suspect no. 1.
Restrictions on drilling offshore and in places like the Arctic National Wildlife Refuge in Alaska may also have contributed to an imbalance between supply and demand. Skeptics point out that the fat profits of oil companies give them plenty of resources to explore for new reserves. Not to mention government subsidies. Plus the fact that ANWR would supply U.S. needs for less than 2.25 years under the best of circumstances. And yet that sounds like more than a drop in the barrel to us. Suspect no. 2.
What have we missed? Oh, yes. OPEC. The Organization of Petroleum Exporting Countries, which consists of 12 sovereign nations, including Hugo Chavez’s Venezuela and Ayatollah Khameini’s Iran.
Congress hasn’t forgotten about the most famous price-fixing, quota-setting, and consumer-gouging cartel on Earth. Earlier this month, the House of Representatives passed a bill, by a veto-proof margin (again), that would call OPEC to account for its antitrusty ways.
H.R. 6074 would amend section 1 of the Sherman Act so that it explicitly applies to restraints of trade in petroleum, natural gas, and other petroleum products. It would condemn price and supply manipulation and the like by "any foreign state, or any instrumentality or agent of any foreign state," when it acts "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". The bill also would bar an "act of state doctrine" defense as well as one asserting foreign sovereign immunity. And it authorizes the Attorney General of the U.S. to bring an action under the new provisions and requires a task force to study stuff like price-gouging and other bad conduct in the energy industry.
H.R. 6074 does not address possibly the most important issue — the political question doctrine. As the Fifth Circuit reminded us on May 28, in a case involving death and injury to contract employees in Iraq, that doctrine prohibits judicial action that second-guesses the conduct of the political branches — the executive and Congress. Lane v. Halliburton, No. 06-28074 (5th Cir. May 28, 2008) (reversing dismissal of tort claims and remanding cases for further development of record). We expect that any action under the NOPEC statute would likely implicate all manner of policies — including the invasion and administration of Iraq, the President’s recent request that Saudi Arabia increase production, and the State Department’s stances towards OPEC and its individual members.
Which signifies to us that NOPEC will go nowhere even if it does pass the Senate and gets past a veto. It apparently doesn’t allow private litigants to sue OPEC; only the Attorney General has such authority. And even if the new President in January 2009 instructs the new Attorney General to sue under NOPEC, the political question doctrine may doom any challenge to violations that happened previous administrations. And probably post-swearing in ones too. What court can sort all that junk out?
Political theater. Don’t you just love it?
