Trump Is Angry Over Oil and OPEC Has a Discreet New Plan to Calm Him Down
The Organization of the Petroleum Exporting Countries (OPEC) told its members in August that they when they talk about oil, they should concentrate on “market stability, and not prices” reports Reuters.
That reportedly came after the law firm White & Case advised OPEC officials in July to avoid discussing oil prices in public.
The advice is meant to deflect U.S. criticism that bubbles up periodically in the form of a bill called the “No Oil Producing and Exporting Cartels Act” or NOPEC. As first introduced U.S. Senator Herb Kohl in 2000, the bill would open foreign governments to lawsuits over market-fixing under the Sherman Antitrust Act of 1890. Sovereign entities are immune to such lawsuits under U.S. federal law, though companies are subject to it.
U.S. Senator Charles Grassley introduced a version of NOPEC this July, following a version in the House in May, and U.S President Donald Trump has been an open critic of OPEC for decades. Last month Trump lobbied OPEC to raise production and lower prices.
The bill arrives at a time when the U.S. depends less on OPEC for its oil than at just about any time in its history. Domestic production has smashed records and production in other non-OPEC countries has also undermined OPEC’s price-setting power.
The language of NOPEC situates it as political posture more than a substantive effort to improve prices for consumers at the gasoline pump. The bill only empowers the U.S. Attorney General—not private lawyers for affected consumers—to bring cases against cartel-promoting foreign governments. In other words, the legislation would put the U.S. executive branch, which is already responsible for diplomacy and regularly negotiates with OPEC, in the driver’s seat.
Both presidents George W. Bush and Barack Obama threatened to veto NOPEC, but Trump has promoted it. Political scientist David Deese of Boston College argued earlier this year in Fortune that Trump has introduced volatility and therefore upward pressure, into the international oil market.
Lawyer Michael D. Ehrenstein, of Ehrenstein | Sager in Miami, writes in Africa Oil & Power that, while NOPEC is unlikely to become law, it would probably be found unconstitutional because it fails to respect the separation of powers of the branches of government.