WASHINGTON – Today, U.S. Senator Herb Kohl (D-Wis.) introduced bipartisan legislation to permit the Department of Justice to bring actions against foreign states – such as members of the Organization of Petroleum Exporting Countries (OPEC) – for collusive practices in setting the price or limiting the production of oil.  If enacted, Kohl’s bipartisan No Oil Producing & Exporting Cartels (NOPEC) Act would prevent future price increases of gasoline that have become routine.

 “This legislation will authorize our government, for the first time, to take action against the illegal conduct of the OPEC oil cartel,” Kohl said.   “The time is now for the U.S. government to fight back on efforts to fix the price of oil and hold OPEC accountable when it acts illegally.  

“Our legislation will hold OPEC member nations to account under U.S. antitrust law when they agree to limit supply or fix price in violation of the most basic principles of free competition.” 

Kohl’s NOPEC legislation effectively reverses these decisions by making it clear that OPEC’s activities are not protected by sovereign immunity and that the federal courts should not decline to hear such a case based on the “act of state” doctrine.  It clears away these judicially created roadblocks so the Department of Justice could bring an antitrust case against OPEC for its price-fixing behavior.

The Federal Trade Commission has estimated that 85 percent of the variability in the cost of gasoline is the result of changes in the cost of crude oil.  Throughout 2007 and 2008, crude oil and gasoline prices marched steadily upwards, peaking last summer at over $140 per barrel for crude and well over $4 per gallon for gasoline.   In recent months, these prices have plummeted as demand has dropped due to the serious global economic recession.   However, despite declining prices, the global oil cartel remains intact and a major force conspiring to raise oil prices to the detriment of American consumers. 

On Oct. 24, 2008, OPEC agreed to cut production by 1.5 million barrels a day, and on Dec. 17, OPEC agreed to a further 2.2 million barrels a day production cut.   And the OPEC cartel makes no secret of its motivation for these production cuts.  OPEC President Chakib Khelil put it very simply in an interview published December 23, 2008, “Without these cuts, I don’t think we’d be seeing $ 43 [per barrel] today, we’d have seen in the $20s. . . . [H]opefully by the third quarter [of 2009] we will see prices rising.”  In another interview in December, Khelil was quoted as saying “The stronger the decision [to cut production], the faster prices will pick up.”

Co-sponsors of the bill include Sens. Arlen Spector (R-Pa.), Patrick Leahy (D-Vt.), Chuck Grassley (R-Iowa), Russell Feingold (D-Wis.), Olympia Snowe (R-Maine), Charles E. Schumer (D-N.Y.), Dick Durbin (D-Ill.), Carl Levin (D-Mich.),  Frank Lautenberg (D-N.J.) and Sherrod Brown (D-Ohio).  Last session of Congress, the legislation was passed overwhelmingly by the Senate as an amendment to the Energy Bill and by the House of Representatives as a stand-alone measure, in both instances with veto-proof majorities.

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