News and opinions on the situation in Venezuela
Can you imagine $3-a-gallon gas price in the United States of Wonderland?
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TOP STORY AT THIS HOUR!
Monday, April 24, 2006
Former head of non-OECD energy statistics section of the International Energy Agency (Paris), Dr. Sohbet Karbuz writes: On April 6, 2006, a bipartisan group of the US Senate Judiciary Committee members led by Chairman Senator Arlen Specter (Republican-Pennsylvania) introduced a legislation, “Petroleum Industry Antitrust Act of 2006" (S.2557), and asked it to be enacted by the Senate and House.
It is basically the same bill proposed (S.2270) in the US Senate on April’s Fool Day in 2004. Already two hearings (February 1 and March 14) were held this year to examine the issue and review the draft legislation.
The proposed bill aims at strengthening oil and gas antitrust laws. For that it defines and prohibits energy price gouging by withholding hydrocarbons unilaterally in order to raise prices or create market shortages, places restrictions on future petroleum industry mergers, and fosters competition by requiring the US Department of Justice and the Federal Trade Commission to consider whether future consolidations need closer scrutiny.
But the bill also permits OPEC Members to be sued in US courts (which in fact would displace sovereignty protection of those countries) for conspiring to control output and for fixing crude oil prices.
Hitler would have called it USA Uber Alles! (above all things).
The Senate has already passed anti-competitive provisions in this bill that stem from the NOPEC (No Oil Producing and Exporting Cartels) Act approved by the Judiciary Committee several times, but have never been passed by the House of Representatives and signed into law.
In Senator Specter’s words the motive of the bill is “to protect the American consumer from enormous increases in gasoline prices and oil prices” He later on specifies that this enormous increase could be as much as $3 per gallon of gas. And supposedly that legislation is needed to ensure that Americans are paying a fair price at the pump.
Can you imagine $3 a gallon gas price in the United States of Wonderland?
In fact, there are two primary targets in the bill — oil & gas companies and OPEC.
Oil & gas companies are target because they are blamed for reaping record profits while gasoline prices are skyrocketing … and OPEC is the target because they think that it is an evil cartel. That’s why Democrat Senator Patrick Leahy claimed that “OPEC has America over a barrel, and we should fight back.”
In a letter to President Clinton on April 11, 2000, signing senators (including Specter) said “we should explore every possible alternative to stop OPEC and other oil-producing states from entering into agreements to restrict oil production in order to drive up the price of oil.”
This is not all.
They also suggested to Clinton to make new law at the international level by giving “consideration to bringing a case against OPEC before the International Court of Justice at the Hague.”
In another letter to President Clinton on June 15, 2000, they say “OPEC ministers seem to now believe the United States and the world will accept, and economically sustain, oil prices at $30 per barrel and above. Mr. President, it is simply unacceptable for us to allow our economy, and the world’s economy, to be placed in jeopardy by a foreign oil cartel. With razor thin oil inventories and soaring gas prices coupled with new reports of a looming shortage of natural gas, we may be at the beginning of a serious and prolonged energy crisis that could send a chill through every economic sector of our country. The time to act is now.”
Senators conveyed their same message to President Bush with a letter dated April 25, 2001.
US Senate Judiciary Committee Chairman Arlen Specter has put reducing US reliance on foreign oil, particularly from OPEC as one of his top priorities. He argues that “to rely on unstable regions, such as the Middle East, for our energy needs is to court disaster.”
In fact what he has been doing with NOPEC bill is the disaster to court.
On his website he argues “I have urged President Bush and then-President Clinton to take legal action against OPEC and its oil-producing nations to prevent them from entering into agreements to restrict oil production in order to increase oil prices. I cosponsored … the NOPEC Act, which would state explicitly that the price fixing activities of OPEC nations, insofar as they affect American consumers, are actionable under U.S. antitrust laws.”
In addition to NOPEC
Act, Specter continues, “we have to use other means to get tough with OPEC, which I believe is an illegal cartel.”
Open the other eye
To encourage competition and prevent oil and gas companies manipulate the market at the expense of consumers either by withholding their oil and gas or by having a monopoly power is a good endeavor. But the US Senators should first try to get things right at their home country. OPEC Members, at least Venezuela and Iran, are not colonies of the US.
“Nothing special will come out of it” asserts the most respected oil industry magazine Oil and Gas Journal’s Editorial in April 2006. The editorial adds that “the NOPEC bill will waste public money and distract officials from real energy problems.”
The bill should have sufficient resistance in the US anyway, since the US oil majors argue that restrictions on mergers would be a disadvantage for US companies in competing with state owned companies. That is also a behind the door reason why the US oil majors lobby governments and international organizations to push some OPEC countries, where the cheapest oil lie, to open their reserves to foreigners. If they cannot access then some time in the future they will have to face the same future as Standard Oil — split.
The proposed bill is also another proof of American Chameleon Policies. No country’s courts besides the US’s can have right to sue an American soldier but the US courts have right to sue foreign countries. It shouldn’t be hence surprising if the US later on proclaims that oil is a public good and cannot be monopolized. But intellectual property right can still be monopolized!
It is a US political habit to look for scapegoats always outside the United States.
Effects of depreciation of the US dollar, rumors, gossips, announcements, interviews, Wall Street traders and funds are mostly overlooked. We are forced to believe that today prices are determined by supply and demand fundamentals in free markets. This is tried to be justified as prove, evidence and fact by dirty use of some numbers, even though the number say contrary.
Since ‘intelligent’ mainstream media could not explain why oil prices hit $75 dolar they had to be creative, for example on April 20 — Car bomb in Nigerian military barracks drove the prices higher. This is how they deceive the world.
On June 1, OPEC will hold its 141st (Extraordinary) meeting in Caracas. This is an opportunity for President Chavez to send a few messages to the so-called developed countries … he should tell the United States that if Americans want to continue their irresponsible patriotic oil consumption, they should pay the real price at gas pumps.
If they want to reduce the price of oil, they should close down the futures markets … or restrict types of players in the market. They should tell their beloved mainstream media not to make the news but report the news.
In fact, if the bill were serious it would have added fuels derived from nonconventional oil, from coal and gas, and ethanol. Oopps, but that would hurt especially US companies…
Americans should stop looking at the world with only one eye open.
Open the other eye!
Dr. Sohbet Karbuz (a Turkish citizen), is former head of non-OECD energy statistics section of the International Energy Agency (Paris). Before joining the IEA he held academic positions in Germany and Austria. He was also a former secretary general of the Foundation for Economic, Technological & Social Research Center (Istanbul, Turkey). He currently works for an industry association. The views presented in the article are his own and should not in any way be interpreted as shared by his current or former employers.
He can be contacted at email@example.com
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