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House votes to let government sue OPEC

Decrying near-record high gasoline prices, the House voted Tuesday to allow the government to sue OPEC over oil production quotas.
/ Source: The Associated Press

Decrying near-record high gasoline prices, the House voted Tuesday to allow the government to sue OPEC over oil production quotas.

The White House objected, saying that might disrupt supplies and lead to even higher costs at the pump. The Organization of Petroleum Exporting Countries is the cartel that accounts for 40 percent of the world’s oil production.

“We don’t have to stand by and watch OPEC dictate the price of gas,” Judiciary Committee Chairman John Conyers, D-Mich., the bill’s chief sponsor, declared, reflecting the frustration lawmakers have felt over their inability to address people’s worries about high summer fuel costs.

The measure passed 345-72. A similar bill awaits action in the Senate.

Separately, at a House hearing, lawmakers were told that crude oil prices have played a relatively minor role in the sharp increase in gasoline costs over the last three months, putting the blame on lower gasoline imports, refinery outages and continuing growth in demand from motorists.

Gasoline prices “may ease somewhat,” Guy Caruso, chief of the Energy Department’s statistical agency, told the House Energy and Commerce investigations subcommittee. But he said pressure on gas prices will remain strong “with the hurricane season approaching, continued tight refinery conditions, low gas inventories and increased demand for summer travel.”

Nevertheless, the House felt it was important to take on OPEC, the major player in oil production. Member states of OPEC late last year cut production by 1.1 million barrels a day to counter what had been a buildup of world oil stocks.

Conyers accused the OPEC engaging in a “price fixing conspiracy” that has “unfairly driven up the price” of crude oil and, in turn gasoline.

His measure would change antitrust laws so that the Justice Department can sue OPEC member countries for price-fixing, and would remove the immunity given a sovereign state against such lawsuits.

But the White House said such suits could spawn retaliatory measures by oil-producing countries and “lead to oil supply disruptions and an escalation in the price of gasoline, natural gas, home heating oil.”

The administration urged “diplomatic efforts ... rather than lawsuits in U.S. courts” to address global oil production. The White House said President Bush would be advised to veto the measure if Congress passed it.

Rep. Steve Chabot, R-Ohio, said he was “very disappointed” by the president’s opposition. “If gasoline prices remain this high it is going to have a significant impact on the economy.”

Lawmakers have been frustrated over their inability to counter the surge in gasoline prices that last week averaged just under $3.22 cents a gallon, within a half penny of an historically inflation-adjusted high in March, 1981.

“As politicians ... there’s no other issues of greater interest to us than gasoline prices and the impact it’s having on the American public,” said Rep. Ed Whitfield, R-Ky., as the House Energy and Commerce investigations subcommittee began a hearing on gas prices and oil industry consolidation.

Rep. Bart Stupak, D-Mich., the panel’s chairman, told of a person in his district complaining that gas had increased 21 cents a gallon over 10 hours this past weekend.

But the latest price surge at the pump may have had less to do with OPEC oil production levels than strong demand for gasoline, not only in the United States but also in Europe, and refinery problems that has cut into gasoline production as well as imports, according to energy experts.

“Increased crude oil prices have played a relatively minor role in (the recent) increase in retail prices,” William Kovacic, a member of the Federal Trade Commission, told Stupak’s subcommittee. He said the price of benchmark West Texas crude increased no more than 15 cents a gallon over the last three months, while retail gas prices jumped 80 cents to 90 cents a gallon, depending on location.

“Big Oil is often quick to blame world crude oil prices, but that argument doesn’t appear to be the full story,” said Stupak.

He said “while consumers pay record prices, oil companies are making record profits.”

Refinery profits have jumped sharply to as much as 70 cents for every gallon of gasoline produced, he said.

The House was expected Wednesday to take up legislation to create a federal law against energy price gouging, imposing criminal penalties on both oil companies and retail outlets.

Some Republicans have criticized the Democratic bill because it vaguely defines price gouging, but supporters of the measure said state laws are unable to protect consumers against pricing by large oil companies.

“I am concerned that some of the less scrupulous in our society may seek to take advantage of these shortages by raising prices to unconscionable levels,” said Rep. John Dingell, D-Mich.