Gas Prices Affect Americans’ Daily Lives
The NOPEC Act expressly authorizes the Justice Department to pursue antitrust litigation against OPEC members, should it choose to, after considering any relevant foreign policy implications.Americans’ daily lives depend a lot on the price of gas. The average U.S. household spends around $2,000 a year just on gasoline. A recent Wall Street Journal article warned that rising prices are “posing a threat to U.S. growth as the cost of fuel and gasoline weighs on drivers, airlines, delivery companies and other big consumers.” Why should something so crucial to Americans be determined in an anticompetitive manner?
It’s estimated that 60% of the total petroleum traded internationally is controlled by the Organization of the Petroleum Exporting Countries (OPEC). Morgan Stanley estimates that rising gas prices could “wipe out about a third of the additional take-home pay coming from tax cuts this year.” Fortunately, the No Oil Producing and Exporting Cartels (NOPEC) Act can change this.
The purpose of antitrust law in the United States is to protect consumers from anticompetitive business practices, including collusion between producers to control prices and supply. OPEC is a classic example of a cartel in direct violation of the Sherman Act. Federal law states that the Sherman Act applies to foreign conduct that has “a direct, substantial, and reasonably foreseeable effect” on U.S. domestic commerce, and sovereign immunity does not apply because the sale of oil is a commercial activity. Unfortunately, the courts have read the law narrowly to shield OPEC from liability, which is exactly why we need the NOPEC Act now.
In recent years, the U.S. has reduced our dependence on foreign sources of oil by increasing domestic production. However, we are still subject to fluctuations in the global oil markets dominated by OPEC. For example, in April 2018, OPEC and non-OPEC producers led by Russia agreed to continue a deal they struck in 2016 limiting supply. Back in 2016, oil was at 43 dollars-a-barrel. It is now over $70. OPEC’s price fixing means working people in our country end up paying more for gas leaving less in their budget for other necessities.
As Chairman of the House Judiciary Committee, I held a hearing in May on the NOPEC Act and it was passed out of the Committee in June. It is now awaiting a vote in the full House of Representatives. In the meantime, a companion version has been introduced in the Senate.
The NOPEC Act expressly authorizes the Justice Department to pursue antitrust litigation against OPEC members, should it choose to, after considering any relevant foreign policy implications. This legislation will help ensure that OPEC nations are subject to U.S. antitrust law so that they, and not U.S. consumers, are paying the price for their cartel behavior.