NOPEC a Detriment to U.S. Economic and Energy Interests
Posted March 13, 2019
A recent analysis from the Baker Institute sheds light on the implications of H.R. 948, the No Oil Producing and Exporting Cartels (NOPEC) Act, that was recently reported by the House Committee on the Judiciary as well as related legislation, S. 370, that has been introduced in the Senate. The daunting takeaway: The Act’s extraterritorial overreach would harm core U.S. economic and energy interests.
The analysis notes that, “if passed, the NOPEC legislation could impose significant economic harm while damaging the long-term power and legitimacy of U.S. international law enforcement initiatives.” The purported international implications range from a weakened U.S. foreign policy stance to the outright undermining of existing unrelated extraterritorial sanctions imposed by the United States such as those against Russia or Syria.
Domestically, the problems NOPEC could cause reach much further. From the report:
“[NOPEC] could increase oil price volatility while potentially depressing oil prices and bringing negative effects for U.S. oil producers, now the No. 1 source of global supply and an important driver of U.S. economic growth. It may, in addition, deter foreign investors and government entities from purchasing or even maintaining assets in the United States. In more extreme cases, this could include avoiding dollar transactions and the American financial system. OPEC countries that faced adverse judgments in NOPEC antitrust cases might also retaliate against U.S. firms, which hold substantial assets in Saudi Arabia, Angola, and other OPEC member states.”
Putting aside the potentially serious implications for the U.S. energy industry, it’s important to note how this will ultimately effect U.S. consumers. Speaking at a recent press conference, U.S. Energy Secretary Rick Perry summarized the potential consequences:
“We need to be really careful before we pass legislation that may have an impact that goes way past its intended consequence. … I’m for a stable pricing, which is directly related to supply. If you remove that and there is no coordination of supply to the market you could have a massive amount of energy supply come into the marketplace and impact producers—impact producers to the point of losing those individuals over a period of time because of the economics, and then a spike in prices that would make anything that we’ve seen historically look pale.”
The biggest thing that can help constrain OPEC is continued American natural gas and oil production, and smart policies that support it. U.S. crude oil production has reached record highs this year, helping to put downward pressure on gasoline prices for U.S. consumers and substantially diminishing the influence of OPEC nations – two of the bills’ primary goals. This legislation would only create significant detrimental exposure to U.S. diplomatic, military and business interests – and, ultimately, consumer economic interests – while having limited impact on the market concerns driving the legislation to begin with.
About The Author
Jessica Lutz is a writer for the American Petroleum Institute. Jessica joined API after 10+ years leading the in-house marketing and communications for non-profits and trade associations. A Michigan native, Jessica graduated from The University of Michigan with degrees in Communications and Political Science. She resides in London, and spends most of her free time trying to keep up with her energetic Giant Schnauzer, Jackson.
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