House passes bill to create oil antitrust task force within DOJ

The US House passed, by a vote of 324 to 84, a bill that would create a new oil antitrust task force within the Department of Justice. Supporters of HR 6074, which also would give DOJ authority to sue foreign oil cartels for violating US antitrust laws, included 103 Republicans, according to its sponsor Rep. Steve Kagen (D-Wis.).

“Until we finally have an energy policy other than drill-and-burn, this bill will begin to set things right for the American people,” Kagan said following the vote. “We cannot drill or grow our way out of this energy crisis. We must begin to think differently in America. That includes loosening the stranglehold other nations have on our economy and exploring new forms of energy.”

The new “Petroleum Industry Antitrust Task Force” would be charged with determining the existence and extent of gasoline price gouging, anticompetitive price discrimination by refiners, actions to inflate prices by constraining supplies, and possible oil price manipulation in futures markets, Kagen said.

The bill, which would amend the Sherman Antitrust Act, also requests a Government Accountability Office study on the effects on competition of prior oil industry mergers and divestitures, he indicated.

“This legislation will address the loopholes and exemptions that oil companies exploit at the great expense of our citizens,” Kagen said. “By passing the Gas Price Relief for Consumers Act, the House agrees that it is time to give US authorities the ability to prosecute the anticompetitive conduct committed by international cartels that restricts supply and drives up prices.”

Frequent investigations

Opponents disagreed when Kagan introduced the bill on May 19. “It seems that every year, Congress conducts a new investigation of the oil industry,” said Rep. Steve King (R-Iowa). “By my estimation, in this House, committees have held no less than 20 hearings, and that’s on gas prices. In the House Judiciary Committee alone, we’ve held two hearings just this year and there’s another one scheduled for May 22,” he added.

Gasoline prices have continued to rise despite such oversight, King continued. “As the Federal Trade Commission [FTC] has reported, changes in world oil prices have explained 85% of the changes in the price of gasoline in the US. The price of gas at the pump closely tracks the price of a barrel of oil in the world market. Further, the FTC has repeatedly found that there is no broad-based collusion to fix prices or engage in price gouging in the retail sale of gasoline.”

This would be the second time the House considered a No Oil Producing and Exporting Cartels (NOPEC) bill, which would attempt to change the Act of State doctrine and the concept of sovereign immunity, King said. “There is no certainty that enabling the attorney general to sue [the Organization of Petroleum Exporting Countries] for an antitrust violation will result in lower gas prices for Americans. Given the instability that such a suit might create in the world oil market, this legislation would be long on psychic compensation but short on actual returns to America’s pocketbook,” he maintained.

King urged House Democrats to consider bills that would authorize federal leasing on the Arctic National Wildlife Refuge’s coastal plain and on more of the Outer Continental Shelf instead. “I recognize that this bill will likely pass the House again, but I urge the majority to quit with the cheap theatrics and easy votes,” he said.

House leaders respond

House leaders responded to H.R. 6074’s passage along party lines. “The House voted today with a strong bipartisan and veto-proof margin to hold foreign oil cartels and Big Oil accountable,” Speaker Nancy Pelosi (D-Calif.) said.

The legislation gives DOJ “a critical tool to pursue antitrust actions against OPEC-controlled entities for fixing prices,” creates a new oil industry task force within DOJ, and requires that major oil company mergers in recent years be examined for anticompetitive effects, she said.

“Instead of using a veto threat to shield cartels and Big Oil companies from accountability, the Bush administration should work with Congress to protect consumers,” Pelosi said.

Minority Whip Roy Blunt (R-Mo.) said that with the price of oil nearing $130/bbl, consumers deserved more than warmed-over legislation seeking to authorize federal lawsuits against overseas oil producing nations.

“Unfortunately, what we saw today on the floor was more theatrical than substantive in nature,” he declared. Republicans plan to offer proposals later in the week to produce more oil and refine more gasoline domestically, Blunt said.