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United States : Chairman Nadler Opening Statement for the Markup of H.R. 948, the No Oil Producing and Cartels Act of 2019

Feb 12, 2019 (Euclid Infotech Ltd via COMTEX) --

House Judiciary Committee Chairman Jerrold Nadler (D-NY) delivered the following opening statement for the markup of H.R. 948, the No Oil Producing and Cartels Act of 2019:

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, our nations antitrust enforcers are unable to protect American consumers and businesses from the direct harm caused by OPECs blatantly anti-competitive conduct.

H.R. 948, the No Oil Producing and Exporting Cartels Act, or NOPEC, addresses these decisions by expressly authorizing the Justice Department to pursue antitrust enforcement actions against OPEC members, should it choose to do so, and by ensuring that American courts have jurisdiction to hear such cases.

I am pleased to join my colleague, the Gentleman from Ohio, Mr. Chabot, as an original cosponsor of this legislation, along with the Antitrust Subcommittee Chairman, Mr. Cicilline, and Subcommittee Ranking Member, Mr. Sensenbrenner.

NOPEC would amend the Sherman Antitrust Act to add a new section 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.

Finally, this legislation clarifies that the act of state doctrine, which generally disfavors judicial review of certain actions by foreign governments, does not prevent courts from deciding antitrust cases brought against foreign governments under this Act.

NOPEC 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 to determine whether litigation is appropriate, given any foreign policy or 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 worlds 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.

This effort to increase crude oil prices directly impacts American consumers because the price of crude oil is the largest single determinant of retail gas prices. According to one estimate, crude oil prices accounted for 50% of the cost of retail gasoline in 2017, and as much as 70% of the cost of gas in 2011.

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 the cost of transporting those goods.

High gas prices, in addition to raising these costs and cutting into Americans income, can also cause a vicious cycle of negative economic effects. For example, when higher prices cause consumers to cut back on purchases and limit their travel, businesses lose revenue, and they may be forced to lay off employees, or to reduce their employees salaries. This, in turn, unleashes another loop of negative economic effects, as those employees have less money in their pockets to spend.

I support this legislation 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, will fix the problem. Congress and the Trump Administration should explore other factors that also drive up gas prices, including an anticompetitive level of concentration among oil refiners, our societys excessive petroleum consumption, and a heightened risk of war and instability in the Middle East. Passing NOPEC, however, would help keep gas prices in check.

I thank the sponsor of this legislation, I urge my colleagues to support this measure, and I yield back the balance of my time.

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