Floor Statement: No Oil Producing and Exporting Cartels Act of 2005 (NOPEC)
FLOOR STATEMENT: NO OIL PRODUCING AND EXPORTING CARTELS ACT OF 2005 (NOPEC)
Mr. President, I rise today, along with my colleagues -- Senators Kohl, Leahy, Grassley, Feingold, Snowe, Schumer, Durbin. Levin. Boxer, Wyden. Corzine, and Dayton -- to introduce the No Oil Producing and Exporting Cartels Act of 2005 (NOPEC). This legislation would give the Department of Justice and Federal Trade Commission legal authority to bring an antitrust case against the Organization of Petroleum Exporting Countries (OPEC).
Every consumer in America knows that gasoline prices have reached record highs recently. Likewise, the price of home heating oil has dramatically increased. These price increases have been acutely painful to people in my home state of Ohio.
Moreover, the rise in jet fuel prices is crippling our already weak airline industry. One of the main reasons that many U.S. airlines have not been able to make a profit has been due to skyrocketing jet fuel costs. For example, in the fourth quarter of 2004, Continental Airlines' jet fuel costs were $453 million, which was a 48% increase compared to last year, and Delta's jet fuel costs were $385 million, which was 76% increase compared to last year. No wonder so many U.S. airlines are teetering on the edge of bankruptcy or are already in bankruptcy.
What is the cause of these high gas and fuel prices? There are a number of factors at play, but there is clear agreement among industry experts about the primary cause of high gas and fuel prices -- and that is the increase in imported crude oil prices. Who sets crude oil prices? OPEC does. The unacceptably high price of imported crude oil is a direct result of price fixing by the OPEC nations to keep the price of oil unnaturally high.
OPEC's hunger for ill-gotten gains is astounding. It seems its appetite can never be satisfied. For example, despite the fact that oil prices recently hit the historic high of $55 a barrel, OPEC members met in December 2004 and decided to cut the output of oil by another 1 million barrels. When demand is high and supplies are cut, that means prices will increase. Nonetheless, OPEC cut production. This is an outrage.
OPEC is probably the most notorious example of an illegal cartel in the world today. It is an affront to the principle that markets should be free. Nation after nation has adopted antitrust laws that make it illegal to fix prices. In 1998, the Organization for Economic Cooperation and Development, then composed of 29 member nations, issued a formal recommendation denouncing price fixing. OPEC's continued actions, in ongoing defiance of American and international antitrust norms, should not be tolerated.
Until now, however, OPEC has effectively received a "free pass" from prosecution under U.S. antitrust laws. For over two decades, enforcement has been constrained by two related court opinions. In 1979, a federal district court found that OPEC's price-setting decisions were "governmental" acts. As a result, they were given sovereign status and protected by the Foreign Sovereign Immunities Act. Subsequently, in 1981, a federal court of appeals declined to consider the appeal of that antitrust case based on the so-called "act of state" doctrine, which holds that a court will not consider a case regarding the legality of the acts of a foreign nation.
Our bill would effectively reverse these decisions. It makes it clear that OPEC's activities are not protected by sovereign immunity and that the federal courts should not decline to hear a case against OPEC based on the "act of state" doctrine. As a result, under NOPEC, the Department of Justice and the Federal Trade Commission could bring an antitrust enforcement action against OPEC's member nations. This bill would force OPEC to begin pricing in a competitive, free-market manner or face the possibility of civil or criminal antitrust prosecution.
Mr. President, Senator KOHL and I have introduced this bill three times before -- in 2000, 2001, and 2004. We intend to keep fighting for American consumers and businesses so that they will not be fleeced by OPEC in the future.
NOPEC says to OPEC: When you want to do business with America, you must abide by our antitrust laws and the rules of the free market. And when OPEC, one day, abides by the rules of the free market, we will all see lower oil and gas prices.
Mr. President, I ask unanimous consent that the text of my remarks appears in the Record alongside the introduction of the bill.
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