Today, Congressman Jerrold Nadler (D-NY), Ranking Member of the House Judiciary Committee, delivered the following opening remarks during the Committee markup of H.R. 5904, the “No Oil Producing and Exporting Cartels (NOPEC) Act.”
“The Organization of Petroleum Exporting Countries, or OPEC, is an international cartel whose members deliberately collude to limit crude oil production as a means of fixing prices, unfairly driving up the price of crude oil to satisfy the greed of oil producers. Such behavior, if done by private companies, would be illegal per se under U.S. antitrust law. Because of a series of court decisions, however, U.S. antitrust enforcers are unable to protect American consumers and businesses from the direct harm caused by OPEC’s blatantly anti-competitive conduct.
“H.R. 5904, the “No Oil Producing and Exporting Cartels Act,” or NOPEC, addresses these decisions by amending procedural law in a variety of ways, and by expressly authorizing the Justice Department to pursue antitrust litigation against OPEC members, should it choose to do so. I am pleased to join my colleague, Congressman Chabot, as an original cosponsor of this legislation along with Chairman Goodlatte, Mr. Marino and Mr. Cicilline.
“The NOPEC Act would amend the Sherman Antitrust Act to add a new section 7A that explicitly makes it illegal for any foreign state to act collectively with others to limit production, fix prices, or otherwise restrain trade with respect to oil, natural gas, or other petroleum products. This provision could be enforced only by the Justice Department.
“The bill also creates an exemption under the Foreign Sovereign Immunities Act to allow litigation against foreign countries to the extent that they are engaged in price-fixing and other anti-competitive activities in violation of this new section 7A.
“Finally, this legislation clarifies that the “act of state” doctrine does not prevent courts from deciding antitrust cases brought against foreign governments under section 7A.
“The NOPEC Act strikes an appropriate balance between allowing aggressive enforcement of U.S. antitrust law against OPEC, to keep oil prices in check, and respecting the separation of powers, by deferring to the Executive Branch whether litigation is appropriate in any given case, in light of foreign policy and national security concerns.
“In 2007, I voted for legislation virtually identical to this measure, which passed the House with overwhelming bipartisan support. Although 11 years have passed since then, many of the reasons for supporting that legislation in 2007 remain valid today.
“OPEC controls more than 80 percent of global oil reserves, 40 percent of the world’s oil production, and more than 60 percent of the petroleum that is traded internationally. When acting collectively, OPEC countries can greatly influence crude oil prices.
“Why should the average American care about this? Because the price of crude oil is the largest single determinant of retail gas prices. According to one estimate, crude oil prices accounted for 57% of the cost of retail gasoline, as of February 2018.
“And the retail price of gasoline touches almost every aspect of Americans’ daily lives, from the cost of commuting to the price of food, and almost every consumer good to the extent that such prices reflect transportation expenses. High gas prices, in addition to raising these costs and cutting into Americans’ income, can also cause a vicious cycle of negative economic effects, such as causing consumers to cut back on purchases and limit their travel, which, in turn, hurts businesses and their employees.
“For a bill we last considered in 2007, one might be tempted to say that the concerns motivating the NOPEC Act are yesterday’s news. In a somewhat literal sense, I agree. According to a CNBC report from last month, oil prices rose to $80 a barrel for the first time since November 2014.
“But recently, the U.S. Energy Information Administration estimated that U.S. regular gasoline retail prices over the period of April to September will rise to an average of $2.90 per gallon, which is 17 cents per gallon higher than it was April and up from an average of $2.41 per gallon last summer. That agency also reported that gasoline prices will reach a summer peak of $2.97 per gallon by June and that this projected increase is primarily the result of higher forecast crude oil prices.
“I support the NOPEC Act because it would provide the federal government with one tool to address unfair retail gas prices. Nevertheless, I caution that it would be a mistake to think that enacting this legislation, alone, would fix the problem. Congress and the Trump Administration should explore the other factors that also drive high gas prices, including an anticompetitive level of concentration among oil refiners, our excessive petroleum consumption as a society, and a heightened risk of war and instability in the Middle East. Passing the NOPEC Act, however, would be a helpful step.
“I thank the Chairman and the sponsor of this legislation, I urge my colleagues to support this measure, and I yield back the balance of my time.”