Gas price records mean OPEC has to be cut down to size
“A version of this article earlier published in Foxnews”
U.S. gas prices have reached a record high. My local gas station has been over $6 for some time. Congress can, and should, fix this.
A global oil exporting cartel led by Saudi Arabia and Russia, known as OPEC, has driven the world economy to the verge of collapse. Oil that ought to be — and was — priced at $70–80 barrel had been forced up over $100 even before Russia invaded Ukraine. OPEC has thus raised the prices of fertilizer, shipping, and food to astronomic levels, all of which threaten the well-being of billions of people and very lives of millions. And OPEC leaders have made it clear that they will enjoy inflated prices for as long as they can squeeze the rest of the world.
In fact, even with oil spiking above $120, OPEC’s much publicized recent offer to increase production would only offset less than 10% of the Energy Information Agency’s estimate of the shortfall resulting from a European Union embargo of Russian oil. The cartel is clearly holding to its goal of oil prices of over $100 range, a price which has consistently crushed global growth in the past.
Carried along by oil exporters, Western oil producers are raking in record profits while declining to push for maximum production even in the midst of a global supply crisis. Governments around the world are tottering from the economic instability fueled by oil profiteering.
Meanwhile, Russia, while selling less oil, is making more money doing so, with the willing cooperation of OPEC producers in the Persian Gulf. These countries could easily access enough additional production to end both the economic crisis and Russia’s ability to finance its invasion of Ukraine. Instead, they have become willing partners with Russian aggression.
The European Union has just agreed to eliminate most of its imports of Russian oil. But the most likely immediate impact of this essential step is to raise global prices still further and potentially to give Russia even more short-term revenues with which to finance its brutal assault on its neighbor. Without Persian Gulf cooperation, there are no plausible sources for the 3–5 million barrels of new-to-market crude oil consumers would need to replace Russian supplies. Without these replacement barrels, prices could skyrocket further.
Long term, the solution to this problem is for oil importers, including the United States, to: recognize the urgent need to eliminate oil’s global monopoly as a transportation fuel; replace it with renewably powered electric cars and trucks; and, in so doing, take an enormous step towards both climate protection and an end to the global scourge of air pollution. Here both Europe and China are leading the U.S. on the policy front. The Biden Administration has been catching up but needs to be even more aggressive to set tough standards on the amount of oil U.S. cars and trucks waste.
But we really need a solution for oil prices today. Here, there is a stunningly simple tool the U.S. Congress can and should use — pass the No Oil Producing and Cartels (NOPEC) bill. Under U.S. antitrust law, any agreement to raise, lower, fix or stabilize the price of a commodity — the very act which is OPEC’s raison d’être — is illegal.
Congress should, could and has taken the first steps toward making OPEC play by the same fairness rules that apply to private oil companies. The Senate Judiciary Committee has approved a bill which would eliminate the OPEC loophole. And this bill, NOPEC, has one very important and powerful consumer protection feature. The president has exclusive power to take OPEC to court — which means that after the NOPEC bill passes, President Joe Biden could make it clear to Saudi Arabia and other Persian Gulf members of the cartel they will be held to account in the U.S. courts if they collaborate to keep oil prices unreasonably high.
We can take the necessary steps to moderate and stabilize oil markets even as the world begins to replace gasoline and diesel-powered cars and trucks with cleaner electric ones. Repealing the OPEC loophole would, for the first time, give oil consumers enough market power to insist that the days of explosively volatile oil supplies and prices are over.