OPEC again becomes target on Capitol Hill
Washington overcame a significant obstacle yesterday in its attempt to sue Opec for behaving as an oil cartel and keeping the price of fuel artificially high.
The House of Representatives overwhelmingly approved legislation to bring a lawsuit against Opec members because they have collectively set the price of oil and limited oil supplies.
The price of oil is at an all-time high of about $129 a barrel and has been in part responsible for surging inflation in the United States, Britain and across Europe.
President Bush is opposed to the legislation because he believes that it will trigger retaliatory measures by Opec member countries such as Saudi Arabia against American business interests.
While the Bill has still to be passed by the Senate, the size of the majority in the House of Representatives — 324 votes in favour versus 84 against — is sufficient to stop Mr Bush from vetoing any new legislation.
Should the Senate approve the Bill, a new American task force would be created as part of the Justice Department to investigate energy markets to root out manipulation and unwarranted speculation.
The legislation passed yesterday would remove the present prohibition against pursuing antitrust actions against a sovereign country.
Opec — the Organisation of the Petroleum Exporting Countries — is a group of countries made up of Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
Oil ministries from each of the oil- producing countries meet regularly to discuss global demand and whether to boost supply to control the oil price. Recently, Opec has refused to increase production even though the oil price has hit a record level.
At the same time, America is trying to cope with a slowing economy and surging inflation. Americans are suffering from soaring energy costs and rising food prices — pressures that are forcing consumers to curtail their spending, which in turn is depressing the economy further.
Economists have pointed out that, stripping out food and fuel, inflation in the US is rising at 2.4 per cent each year, a rate that is not perceived to be problematic.
Some Republicans have argued that the legislation, similar to a Bill pushed through by Democrats last year, does not address the country’s energy problems. Sceptics claim that Congress should instead open the way for more domestic oil production including drilling in the protected Arctic National Wildlife Refuge in Alaska and some offshore waters that have been off limits to oil companies for more than 25 years.
Opec insisted yesterday that the rising cost of oil was not related to a shortage of demand but to the weakness of the US dollar and financial speculators. Both Venezuela’s energy minister and Abdullah al-Badri, the Opec Secretary-General, yesterday argued that global oil markets were well supplied.
Source: TimesOnline
Tags: crisis, oil price, opec, price rising