House passes bill to sue Opec over oil prices

PRICE CONCERNS: Lawmakers say Americans are

The US House of Representatives overwhelmingly approved legislation on Tuesday allowing the Justice Department to sue Opec members for limiting oil supplies and working together to set crude prices, but the White House threatened to veto the measure.

The bill would subject Opec oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that US companies must follow.

The measure passed in a 324-84 vote, a big enough margin to override a presidential veto.

The legislation also creates a Justice Department task force to aggressively investigate gasoline price gouging and energy market manipulation.

"This bill guarantees that oil prices will reflect supply and demand economic rules, instead of wildly speculative and perhaps illegal activities," said Democratic Rep. Steve Kagen of Wisconsin, who sponsored the legislation.

The lawmaker said Americans "are at the mercy" of Opec for how much they pay for gasoline, which this week hit a record average of $3.79 a gallon.

The White House opposes the bill, saying that targeting Opec investment in the US as a source for damage awards "would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to US refiners".

The administration said less oil going to refineries would limit available gasoline supplies and raise fuel prices.

Foreign investment in US oil infrastructure has declined in the last decade. But the state-owned oil companies of several Opec nations are owners of US refineries, and those investments could be affected if the legislation becomes law, said Arlington, Virginia-based FBR Capital Markets Corporation.

The bill also requires the Government Accountability Office to carryout a study on the effects of prior oil company mergers on energy prices.

The Senate would still have to approve the House measure.

The Senate previously approved similar legislation as part of a broad energy bill. However, the Opec-suing provision was removed after White House opposition in order to get the underlying energy legislation signed into law. (Reuters)

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READERS' COMMENTS

first step towards complete repeal of immoral antitrust laws
Posted by Ivo Cerckel, Siquijor, Philippines on Friday 23 May 2008 at 12:00 UAE time

The House of Representatives does not seem to be aware that price-fixing in the Sherman US Antitrust Act is a per se offence. No defense resting on claims that the prices fixed are reasonable will succeed.

The opposite of the per se-approach is the rule of reason which says that only combinations and contracts unreasonably restraining trade are subject to actions under the anti-trust laws.

The bill authorising a lawsuit against OPEC for price-fixing would in part amend the Sherman Antitrust Act of 1890. It provides in part that the cartel would be prohibited when such action, combination, or collective action has a direct, substantial, and REASONABLY FORESEEABLE EFFECT [emphasis mine] […] in the United States.

This is the rule of reason for oil-price-fixing.

The rule of reason, replacing the per se-approach, in oil-price-fixing cases is the first step towards the complete repeal of the immoral antitrust laws.

For more see my Honest Money-blog.

antitrust laws are immoral
Posted by Ivo Cerckel, Siquijor, Philippines on Wednesday 21 May 2008 at 04:50 UAE time

As Alan Greenspan said more than 45 years ago:
http://www.polyconomics.com/searchbase/06-12-98.html
SNIP

The world of antitrust is reminiscent of Alice’s Wonderland: everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet “too much” competition is condemned as “cutthroat.” It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as “enlightened” when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict — after the fact.

His Majesty King Abdullah bin Abdul Aziz Al Saud, Custodian of the Two Holy Mosques, last Friday gave little credit to US President Bush for the decision of His Majesty to increase Saudi oil production to its highest level in two years.

One of the prerequisites to keep - and guard - the supply and demand of oil in close balance is that the currency which denominates the resulting prices be a readily acceptable in exchange by everyone and that is sought for the purpose of being reexchanged.

The US dollar does no longer fulfill those requirements.

The US dollar can thus no longer keep - and guard - the supply and demand of oil in close balance.

Does the US House of Representatives really think that its immoral antitrust laws can keep - and guard - the supply and demand of oil in close balance?

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