What is NOPEC?

Last week, the U.S. Senate Judiciary Committee voted 17-4 to pass the No Oil Producing or Exporting Cartels (NOPEC) bill, which if passed in Congress and signed by the President would allow the U.S. Attorney General to sue OPEC and/or its members for antitrust collusion.  The bill is designed to protect U.S. consumers from volatile energy spikes that are being partly blamed on orchestrated supply cuts through OPEC and its members. Will it have a positive impact or hurt U.S. consumers?

The UAE’s Energy Minister Suhail al-Mazrouei recently stated that, “The last thing we want is someone trying to hinder that system.  If you hinder that system, you need to watch what you’re asking for, because having a chaotic market you would see…. a 200% or 300% increase in the prices that the world cannot handle.”  Various iterations of a NOPEC bill have been considered in the U.S. for decades, but this appears to be the closest the U.S. is coming to moving forward with the bill.  Many trade groups and organizations not affiliated with OPEC have expressed discomfort with the proposed bill and believe there will be unintended negative impacts on America.  The American Petroleum Institute (API) has openly opposed NOPEC legislation for years.  In 2019 the API stated, “We see this legislation as creating significant detrimental exposure to U.S. diplomatic, military, and business interests while having limited impact on the market concerns driving the legislation”.  The legislation threatens serious unintended consequences for the U.S. natural gas and oil industry….and represents a political act aimed at removing a sovereign nation’s litigation immunity from certain U.S. laws, which opens the opportunity for reciprocal or even additional action on the part of those impacted countries.

While it’s obviously tempting to go after OPEC countries during unprecedented times related to energy costs, the potential ramifications could exacerbate the problems and prolong them.  It doesn’t appear that the current Biden Administration has agreed to sign the bill if passed, but they are considering the positive and negative implications.  Progress of the NOPEC bill is critical to keep an eye on, as more uncertainty in the oil market looms.

https://www.cnbc.com/2022/05/10/uae-saudi-arabia-energy-ministers-hit-back-at-nopec-bill.html

https://oilprice.com/Energy/Energy-General/The-NOPEC-Bill-Could-Send-Oil-Prices-To-300.html

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