Wednesday, May 21, 2008

House Votes Greater Dependence on OPEC

oh no, i am not making this stuff up

According to (which links to a Reuters story at yahoo):

The U.S. House of Representatives passed in a landslide legislation that would allow the Justice Department to sue OPEC for cooperating to set high oil prices and limiting supply, but President Bush said he will veto the bill.

The bill would attempt to subject OPEC to U.S. antitrust laws and would include Saudi Arabia, Iran and Venezuela. The vote margin, 324-84, is large enough to override a presidential veto, which was threatened in fear of retaliation by OPEC.

This attempt by Congress to extend our antitrust laws to cover an organization made up of other sovereign nations is wrong-headed for several reasons, some obvious and some not.

OPEC, as known to everyone not a member of the House of Representatives, stands for the Organization of Petroleum Exporting Countries. These countries, not being part of the United States, are not required to recognize our laws or courts.

However, the bill would leverage regulation of foreign-owned oil refinery and transport properties in the U.S to get cooperation from the individual OPEC nations, such as Saudi Arabia, Iran, and Venezuela.

The entire stated purpose of OPEC is to cooperate to set high oil prices and limit supply. Congress may as well say that the United States has authority over the treaties other nations may make with one another, or over the legal systems of any country doing business in the United States.

And their price-fixing scheme is not totally effective. The price of oil is set by the international oil market: sellers try to find the buyer willing to pay the highest price, and buyers try to find the cheapest source. OPEC is simply one group of sellers in the international oil market. The way to get them to lower their price is to buy from a less expensive source.

Another group of sellers is U.S. domestic oil producers. If Congress wishes to increase supply, it can allow domestic producers to drill for oil in places which are already known to have oil, such as the continental shelf off our own coasts and in Alaska.

But rather than stand up to the environmental lobby, Congressional Democrats would encourage OPEC to increase its supply, thereby increasing our dependence on foreign oil.

There is no rule or law that says an OPEC country must produce a single drop of oil. The only thing keeping them producing oil is the international market price. You can't sue someone into selling you something at your price.

What's next: legislating that pi henceforth will be equal to 3.0? Perhaps instead the Congress would like to ensure that the oil fields in Saudia Arabia meet OSHA requirements, or those in Kenya aren't harming the sensitive East African environment.

And if OPEC decides to retaliate against Congressional arrogance, they can turn off the spigot, or merely lower their output even further. That would be a minor inconvenience for them, and the consequences for us would be disastrous.

But perhaps the Democrats in Congress know that already, and believe they can blame President Bush for the economic depression that would follow their attempt to extend our laws to the whole world.

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Ivo Cerckel said...

"And if OPEC decides to retaliate against Congressional arrogance, they can turn off the spigot, or merely lower their output even further."

A better retaliation would be for OPEC to follow Iran's example
and stop selling oil for worthless green paper, aka the US dollar,
and start selling it for Honest Money, like the yen or the euro.

Marvin said...

Democrats are going to screw everything up worse, get the Republicans blamed for it, and then get even more election victories. We need another Newt and we need him now.

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