OPEC - U.S. Sovereign Status Part 2: Challenges

Inside This Section:
OPEC Overview
Before OPEC
OPEC's Rise to Power
OPEC Price Fixing
OPEC - U.S. Sovereign Status Part 1
OPEC - U.S. Sovereign Status Part 2: Challenges
OPEC's Influence on the U.S.


OPEC’s sovereign status means that the US government protects OPEC from anti-trust lawsuits filed against them by any individual and group which believes they have been hurt or affected by OPEC’s oil monopoly. In 1978, a non-profit labor organization, the International Association of Machinists and Aerospace Workers (IAM), decided to challenge this protection by filing a lawsuit against OPEC under the Sherman Act. Three years later the case was rejected by the US Ninth Circuit Court of Appeals, citing its immunity status .

Naturally, as the US remains dependent on OPEC’s product and thus at their mercy, it was almost inevitable that someone would once again cry foul, and those cries came from the US Congress in 2007, in the form of bills from both houses seeking to change antitrust laws so that OPEC could no longer escape prosecution. The No Oil Producing and Exporting Cartels Act of 2007, also called “NOPEC” (identical bills HR 2264 and S 879 ) both have this end in mind.

The House bill passed in May of 2007 by a 345-72 margin—overwhelming bipartisan support. The Senate bill is in committee. In the event they pass, the bills would go on to President Bush, who has promised to veto them. However, if Congress overrides his veto, the consequences will be devastating to OPEC’s oil sales in the US. Why? Because then, anyone who believes that OPEC’s monopoly on oil has harmed them—and this could conceivably include every American who has ever filled up at the pump—can file an antitrust lawsuit against them.

While some people applaud these efforts, they have their critics because it seems implausible that OPEC would continue to export oil to the US if they were vulnerable to these lawsuits. OPEC is responsible for about 40% of world oil production and they control about two-thirds or more of the world’s proven oil reserves—in short, they don’t need the US nearly as much as the US needs them.

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