Will US problems with OPEC be resolved with the passing of the NOPEC bill? (Article)

US - OPEC relations have always been strained since the oil crisis of the 1970s. American politicians have used all available means to put pressure on OPEC to stabilize the oil market.

Energy security and the US economy, as one of the largest consumers of energy, are directly related to the decisions of OPEC.

Republican foreign policy in the United States is directly related to fossil fuels, especially oil. Under Donald Trump, the United States worked hard to weaken OPEC's position in the global energy market equations.

In June 2018, OPEC was directly confronted with an aggressive policy by US politicians, especially Donald Trump himself.

The oil price war and OPEC's attempt to maintain its important role in the market have been repeatedly opposed by the Trump administration, which has claimed that the real price at the time was $ 30 a barrel.

Nopec.. between Trump and Biden

It should be noted that during Trump's presidency, US lawmakers were drafting a bill called "No to Oil Cartels" or "No to OPEC." Given the important role of oil in US foreign policy and energy security, the bill is intended to revive Sherman's "antitrust law"; A law used a century ago to dissolve John Rockefeller's empire.

Efforts are also underway to weaken OPEC in the oil market during Joe Biden's presidency.

It should be noted that although Biden and the Democrats' focus is on the energy transition, combating climate change, and increasing the role of renewable energy in the US energy mix, without stability in the oil market, Biden's energy policy will not be very successful.

The whole energy transition process requires fossil fuels, which means that OPEC continues to play an important role in the global energy market.

Last week a delegation of US Senate representatives considered a bill to sue OPEC and other oil-producing countries to increase oil prices.

The new NOPEC bill gives the US Attorney General the right to sue oil-producing countries under antitrust laws. A similar version was approved by the House Judiciary Committee last year.

Opec or U.S Production?

While the NOPEC bill has not been successful in the US Congress for almost 22 years, supporters of the bill say that given the ongoing energy crisis and Russia's invasion and its important role in the oil market, the bill is likely to pass in the Senate this year.

Last November, OPEC Plus rejected US President Joe Biden's request to increase production. In response to Biden's request, OPEC called for increased US oil production.

If the United States believes that the world economy needs more energy, then it has the potential to increase production.

It should be note that In February 2019, a US House committee passed a bill that would allow anti-monopoly lawsuits against OPEC. The House Judiciary Committee approved the bill known as NOPEC.

The United States and its allies are already facing big challenges securing reliable energy supplies.

U.S Revenge from Opec

The lawsuit would strip OPEC of its immunity from US complaints and would allow the attorney general to sue the oil-producing group or any of its members for collusion in controlling oil prices.

Trump backed the NOPEC bill in a book he published in 2011 before taking office.

However, he has not backed NOPEC as president, stressing the importance of US relations with Saudi Arabia and the sale of military equipment to the country.

At the time, the American Petroleum Institute Oil and Gas Group and the US Chamber of Commerce opposed the NOPEC bill, saying that the boom in US energy production had reduced OPEC's influence.

International energy companies have also opposed the bill, saying passing such a law could retaliate against OPEC.

The Judiciary Committee of the US House of Representatives approved a similar bill in 2018, but it was never put to a vote in Parliament.

However, the bill has been in place since Republican President Donald Trump repeatedly attacked OPEC, pressuring the group to cut production and help raise oil prices. Finally by 5 May U.S. Senate panel passes bill to pressure OPEC oil cartel.

Nopec and Fuel Prices

According to the US Chamber of Commerce, NOPEC "would have zero impact at taming gasoline prices and could perversely cause prices to rise due to the geopolitical risk that comes with this legislation.

“The Chamber is unalterably opposed to anti-competitive conduct in commercial markets by foreign states and their agents. However, S. 977 ignores the legal and policy complexities at play when a nation-state engages in or directs commercial conduct.

Antitrust cases involving nation-state commercial activity can already be brought under existing law.

The proposed legislation would prohibit the courts from carefully evaluating sovereign immunity claims. Passing the bill means nothing for now, it needs to be passed into US law to take effect. Recent history shows the US shale revolution cannot survive & thrive without an effective swing producer.

NOPEC would roof already high uncertainty & volatility in energy & financial markets.

Despite focusing on climate change and energy transitions, the Biden government must provide the conditions for increasing the oil production capacity of American companies or witness the continuation of the energy crisis and rising oil and gasoline prices.

As the election approaches and the energy crisis continues, the American political climate will not be in the Democrats' favor.

The passage of the NOPEC bill will not solve the problems of the US energy market, especially the issue of rising gasoline prices.

Dr Umud Shokri, Author of "US Energy Diplomacy in the Caspian Sea Basin Changing Trends Since 2001", Foreign Policy&Energy Consultant.