Unbelieveable!! U.S. House of Reps passes bill authorizing Justice Dept to Sue OPEC!!
I can hardly contain my shock and consternation after reading the article below! If they do actually get this past a presidential veto, as the voting margin suggests, and sign this into law, this measure will backfire on American interests with unbelieveable force. First of all, while Bush was in Saudi Arabia requesting a production increase, various media outlets documented quite clearly that Saudi Arabia is extracting their oil at near-capacity rates. I have not seen comparable information from other OPEC countries, but I have every reason to believe that these countries are taking advantage of present prices and pumping their way to profits.
I don't claim to have a full understanding of what portion of the present price of oil is attributable to supply and demand, and what portion is speculative, but I do know that OPEC is not the only arbiter of price. Futures traders on the commodities exchanges and non-OPEC oil producers also have a say, and if present prices were that far out of whack with market forces, then market forces would ostensibly correct the situation.
OPEC has increased production quite substantially in 2008 vs. 2007:http://www.mees.com/Energy_Tables/crude-oil.htm From an average of about 26 million bpd in 2000, the rate has grown to touch the 30 million bpd mark in early 2008. In any event, present production is very clearly above historical levels, so to suggest that prices are due to deliberate price manipulation is quite an accusation... and doesn't exactly promote friendly diplomatic relations with those OPEC nations with whom we still have some workable relationship.
Of course, OPEC is in a powerful position because they have so much of something we need so very badly. A.) That's our own fault for failing to develop alternative fuels after the 1970s when the potential for future energy crises should have been readily apparent to any but the most short-sighted politicians, and B.) The price of oil is largely our own doing because of mismanagement of our own currency... the fall of the dollar is the biggest contributing factor to the rise in oil prices, and the latest action by the U.S. House indicates there is no understanding of this fact on capitol hill.
If we bring action against OPEC interests on the basis of this proposed legislation, watch what happens to the price of oil. They can tighten the spigot at the drop of a hat, so this brazen act of cowboy diplomacy creates the real danger of a retaliatory round of financial warfare where, unfortunately, innocent consumers of the world are the unwitting fodder for fire. Get ready for $200 oil, because after today's news it seems as likely to me as ever!
WASHINGTON (Reuters) - The House of Representatives overwhelmingly approved legislation on Tuesday allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices, but the White House threatened to veto the measure.
The bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow.
The measure passed in a 324-84 vote, a big enough margin to override a presidential veto.
The legislation also creates a Justice Department task force to aggressively investigate gasoline price gouging and energy market manipulation.
"This bill guarantees that oil prices will reflect supply and demand economic rules, instead of wildly speculative and perhaps illegal activities," said Democratic Rep. Steve Kagen of Wisconsin, who sponsored the legislation.
The lawmaker said Americans "are at the mercy" of OPEC for how much they pay for gasoline, which this week hit a record average of $3.79 a gallon.
The White House opposes the bill, saying that targeting OPEC investment in the United States as a source for damage awards "would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to U.S. refiners."
The administration said less oil going to refineries would limit available gasoline supplies and raise fuel prices.
Foreign investment in U.S. oil infrastructure has declined in the last decade. But the state-owned oil companies of several OPEC nations are owners of U.S. refineries, and those investments could be affected if the legislation becomes law, said Arlington, Virginia-based FBR Capital Markets Corp.
The bill also requires the Government Accountability Office to carryout a study on the effects of prior oil company mergers on energy prices.
The Senate would still have to approve the House measure.
The Senate previously approved similar legislation as part of a broad energy bill. However, the OPEC-suing provision was removed after White House opposition in order to get the underlying energy legislation signed into law.
(Editing by Christian Wiessner)