U.S. Senate Judiciary Passes NOPEC Antitrust Bill
The U.S. Senate Judiciary Committee has approved the No Oil Producing and Exporting Cartels Act (NOPEC) bill.
Yahoo!Finance reports U.S. Senate Passes NOPEC Antitrust Bill
It is still unclear whether the bill, approved by the Senate panel, will move on to the Senate or to U.S. President Joe Biden. It is also unclear whether Biden would sign this legislation into law.
NOPEC History From Wikipedia
The No Oil Producing and Exporting Cartels Act (NOPEC) was a U.S. Congressional bill, never enacted, known as H.R. 2264 (in 2007) and then as part of H.R. 6074 (in 2008). NOPEC was designed to remove the state immunity shield and to allow the international oil cartel, OPEC, and its national oil companies to be sued under U.S. antitrust law for anti-competitive attempts to limit the world’s supply of petroleum and the consequent impact on oil prices. Despite popular sentiment against OPEC, legislative proposals to limit the organization’s sovereign immunity have so far been unsuccessful. “Varied forms of a NOPEC bill have been introduced some 16 times since 2000, only to be vehemently resisted by the oil industry and its allied oil interests like the American Petroleum Institute and their legion of “K” Street Lobbyists.”
There have been numerous attempts to pass a NOPEC bill over the pass decade. This one now looks good to go.
The NOPEC Bill
Let’s discuss the NOPEC Bill as it currently stands.
This bill prohibits a foreign state from engaging in collective action impacting the market, supply, price, or distribution of oil, natural gas, or any other petroleum product in the U.S. Specifically, a foreign state is prohibited from
- collective action that limits the production or distribution of such product,
- collective action to set or maintain the price of such product, or
- any other action that restrains trade of such product.
Specified defenses such as sovereign immunity (i.e., a foreign state’s immunity from the jurisdiction of U.S. courts) and the act of state doctrine (i.e., the prohibition of a court invalidating an official act of a foreign sovereign performed within its own territory) shall not apply to a foreign state’s violation of this bill.
US Arrogance
Somehow, the US Congress thinks it can set policy for the world and enforce it.
The US weaponized the US dollar now it wants the right to weaponize all trade.
NOPEC Irony
The irony in NOPEC is that US sanctions on Russia, and somewhat enforced by the EU are in direct violation of the stated intent of NOPEC.
Consider the first bullet point “collective action that limits the production or distribution of such product“
Isn’t that precisely what the US is doing right now?
And what about the third bullet point “any other action that restrains trade of such product” like sanctions?
Bad Policy Ideas
“It’s always a bad idea to make policy when you are angry,” @finley_mark, a fellow in #energy and global #oil at the @BakerInstitute and former analyst and manager at the Central Intelligence Agency, tells @TimoGard. https://t.co/clmecnp35N #OPEC #NOPEC #oilprice #oilprices
— Rice University News (@RiceUNews) May 5, 2022
Reuters Comments
It is unclear exactly how a federal court could enforce judicial antitrust decisions against a foreign nation. But several attempts at NOPEC over more than two decades have worried OPEC’s de facto leader Saudi Arabia, leading Riyadh to lobby hard every time a version of the bill has come up.
But anger has risen lately in the U.S. Congress about soaring gasoline prices that have helped fuel inflation to the highest level in decades, raising the chances of its success this time.
Some analysts said that rushing a bill through could lead to unintended blowback, including the possibility that other countries could take similar action on the United States for withholding agricultural output to support domestic farming, for example.
“It’s always a bad idea to make policy when you are angry,” said Mark Finley, a fellow in energy and global oil at Rice University’s Baker Institute and former analyst and manager at the Central Intelligence Agency.
Saudi Reaction Coming
A strong reaction by Saudi Arabia is all but assured.
Instead of buying US weapons, look for Saudi Arabia to turn to China and perhaps even Russia.
Global Currency Crisis
The Fed, likely under pressure from Biden, confiscated Russia’s dollar reserves after it invaded Ukraine.
I discussed the implications on March 9, in Unprecedented Fed Action May Have Just Started a Global Currency Crisis
The Fed has no authority to confiscate reserves. This was an illegal action, and there are implications.
The key implication is that people better think twice about fiat reserves than can be taken at will.
Yet, that still does not imply another currency supplanting the dollar.
US Sanction Policy Drives China Into Russia’s Loving Arms
Recall Trump’s ban on Hauwei 5G technology and chips to support it.
The US lost out on chip sales and android phones sales. China is now making chips and phones and supplying Russia.
For details, please see US Sanction Policy Drives China Into Russia’s Loving Arms
The Fed’s confiscation of dollars added fat to huge sanction and trade war fires started by Trump.
Re-Thinking Dollars
Actions by Trump and Biden will accelerate a move to re-think holding dollars, even if no dollar replacement reserve currency is remotely in sight.
If you think about the implications of what I just stated, there is a 4-letter word that is the likely beneficiary.
Here’s a hint: It begins with letter “G”.
Just don’t overthink things. The Yuan Will Not Replace the US Dollar, Nor Will It Be Backed by Commodities
In light of recent Fed actions, I pinged Michael Pettis at China Financial Markets some questions on China’s reserves.
Here’s the discussion: What Does China Do With a Dollar That’s No Longer Risk Free? Buy Gold?
This post originated at MishTalk.Com.
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Mish
He is merely saying that the USA cannot dictate to other countries how they sell their product. In fact, it’s ludicrous to even try. If anything this will anger OPEC who will manipulate the price of oil even more to punish US arrogance. The USA has no control over OPEC.
In reality, with or without Trump, 1 million Americans would have died from COVID.
It’s COVID’s fault, not anyone in politics.