The No Oil Producing and Exporting Cartels (NOPEC) bill has made progress on its way towards becoming law, being passed 17 to 4 by the Senate Judiciary Committee on May 5. The law, if it is passed by the full House and Senate, would remove the sovereign immunity that has historically protected the Organization of the Petroleum Exporting Countries (OPEC) from antitrust lawsuits.
Under NOPEC, countries would be restricted from colluding to boost crude oil prices. OPEC countries like Saudi Arabia could be sued in federal court by the U.S. attorney general for restricting crude oil output, though it's unclear how any antitrust judgements could be enforced.
"I believe that free and competitive markets are better for consumers than markets controlled by a cartel of state-owned oil companies ... competition is the very basis of our economic system" Democratic Senator Amy Klobuchar said.
Following the Russian invasion of Ukraine, energy prices skyrocketed across the board, but OPEC countries have declined to significantly boost output in order to combat that inflation. Instead, OPEC has agreed to continue its modest roll back of production cuts that were introduced at the beginning of the pandemic.
Several versions of NOPEC have failed in Congress over the past two decades, largely due to pressure from OPEC, petroleum companies, and oil and gas trade groups. However, recent surges in gas prices have pushed Democratic U.S. lawmakers to act.
On the other hand, many Republican lawmakers and oil industry advocates are concerned about the potential impact of passing such a law. In the past, OPEC has warned that it will start selling oil in currencies other than the U.S. dollar if a NOPEC law is passed. This could significantly weaken the dollar's position as the world's primary reserve currency.
OPEC may also begin to restrict oil shipments to the U.S. if NOPEC is passed, according to Republican Senator John Cornyn from Texas, the top oil producing state in the country. During his campaigns from 2015 through 2020, Cornyn brought in $1.4 million in donations from the fossil fuel industry. Last summer, he referred to renewable energy as "a cult" and "pure fantasy".
"If we really want to deal with price at the pump we ought to produce more oil and gas here in America," Cornyn said.
The American Petroleum Institute (API), the most powerful oil and gas lobbying group in the country, has also come out in strong opposition to NOPEC. According to API, NOPEC "creates significant potential detrimental exposure to U.S. diplomatic, military and business interests while likely having limited impact on the market concerns driving the legislation."
OPEC companies are able to produce oil for much less than U.S. companies. Energy analysts have expressed concern that passing NOPEC will lead OPEC to flood global markets with oil, effectively undermining American oil producing companies' ability to sell abroad. There are also concerns that other countries could take similar stances against the U.S. regarding its restrictions of agricultural output to boost domestic farming.
Along with passing through Congress, NOPEC will also need to be signed by President Joe Biden, and there is some doubt as to whether or not he will support the law.