Senator Lautenberg Introduces Bill To Take Action Against OPEC

N.J. Sen. Says OPEC Production Limits Inflate Gas Prices, Violate International Trade Laws

May 5, 2008 -- WASHINGTON, D.C. – Late last week, U.S. Senator Frank R. Lautenberg (D-NJ) introduced legislation to force action against the Organization of the Petroleum Exporting Countries (OPEC) for its anti-competitive practices and illegal export quotas on oil, which ultimately lead to higher gas prices here at home.

OPEC building, Vienna: Photo by Spino73 (CC)

“While OPEC and the oil companies have seen record profits, American families are paying record gas prices at the pump,” Sen. Lautenberg said. “The illegal actions of OPEC nations have gone on for too long, and it is time to stand up to this cartel and protect the interests of the American people.”

Sen. Lautenberg’s bill would require the United States Trade Representative to initiate consultations with countries that are members of both OPEC and the World Trade Organization (WTO). If consultations failed, the U.S. would request that the WTO convene a dispute settlement panel to judge the case. If the case were decided in the U.S.'s favor, OPEC would be required to cease its illegal operations or the U.S. would be able to impose trade remedies.

OPEC consists of 13 of the world’s largest oil producing nations, producing slightly more than one-third of the world’s oil, with 75 percent of the known reserves.

Eight of the OPEC nations—Ecuador, Indonesia, Kuwait, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela—are members of the WTO. And Iraq, Iran, Libya and Algeria are seeking admission into the WTO.

Under WTO rules, countries are prohibited from placing restrictions on exports. Yet despite this prohibition, by negotiating among themselves, OPEC sets export quotas for each of its member nations, and is able to exercise a great deal of control over the international price of oil.

OPEC’s manipulation of the oil market has been a major factor in the dramatic increase in gas prices, which have more than tripled since 2002 rising from $1.10 per gallon to $3.60 today with many analysts forecasting $4 per gallon this summer.

The bill, the OPEC Accountability Act of 2008 (S. 2964), is co-sponsored by Sens. Carl Levin (D-MI), Byron Dorgan (D-ND), Bob Casey (D-PA) and Bernie Sanders (I-VT). It is based on similar legislation Sen. Lautenberg first introduced in 2004.

Source: Senator Frank R. Lautenberg

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