House passes bill to sue Opec over oil prices

But White House threatens to veto legislation in fear of retaliation.
House passes bill to sue Opec over oil prices
By Tom Doggett
Wed 21 May 2008 02:02 AM

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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