Three Reasons ‘NOPEC’ Legislation Won’t Help the Energy Crisis (and Could Make It Worse)

Amanda Eversole
Posted May 10, 2023

The impulse to retaliate after the Organization of Petroleum Exporting Countries’ (OPEC) decision to cut crude oil production during an energy supply crisis – though understandable – should not trigger actions that do more harm than good. One such legislative action takes aim at OPEC itself but could harm U.S. interests instead. API urges members to vote NO when H.R. 3081, NOPEC, comes before the committee.

In a new letter to top officials on Capitol Hill, API President and CEO Mike Sommers reminds Congress that the need to pass NOPEC legislation against desultory global energy actions has been mitigated in recent years by the success of American oil and natural gas. The “NOPEC” legislation that is before Congress would allow OPEC or member nations to be sued in federal court and empower the Department of Justice to file an antitrust lawsuit against OPEC for trying to inflate prices. These ideas are not new in Washington but could actually hurt U.S. efforts to address energy supply issues. Instead, the best way to respond to OPEC’s announcement is simpler and something broader Washington should do today: Enact federal policies that enable U.S. production.

API’s “Make, Move and Improve” plan details actions Washington can take to meet America’s energy needs, help address the global crisis, and decrease U.S. dependence on the whims of foreign suppliers such as OPEC.

Here are three reasons NOPEC legislation – “No Oil Producing and Exporting Cartels” – is the wrong response to the actions by OPEC and could harm efforts to lessen the producer group’s influence:

1. NOPEC Could Invite Harm to U.S. Diplomatic, Economic and Enemy Interests

• As API recently pointed out, U.S. policy toward OPEC has been marked by misunderstandings.
• Chief among them is America undervaluing the “existential economic priority” that control over oil production represents to the group’s members, notes a brief by Rice University’s Baker Institute.
• In that context, the Institute notes negative outcomes that could result from NOPEC legislation:
  • Increased oil price volatility, which could hurt U.S. consumers as well as U.S. oil producers and their efforts to produce more energy and mitigate the clout of OPEC.
  • Damage U.S. relationships with OPEC countries and broader global alignments by taking those relationships down “unpredictable and potentially unpleasant paths.”
  • Inject new systemic risks that could deter OPEC countries from investing in U.S. assets.

2. NOPEC’s Enforcement Mechanisms Are Questionable at Best

• Legal judgments obtained under NOPEC could be difficult to enforce, practically speaking. This also could undermine unrelated extraterritorial sanctions imposed by the U.S. against other nations. As the Baker Institute observed: “Just because a concept has a viable legal foundation does not make it a strategically advisable course of action.”
• The Sherman Antitrust Act already applies to the commercial activities of nations, even for activity occurring abroad. There is no reason to keep stirring the pot at an already chaotic global time.

3. NOPEC Could Increase Risk of Retaliation

• NOPEC legislation could invite reciprocal action by impacted countries against U.S. operations and investments – across all sectors, not just oil and natural gas.
• As The Wall Street Journal points out: “[NOPEC] might be politically satisfying, but the Saudis and its Gulf allies could easily retaliate by cutting production further and hurting U.S. consumers.”

No matter how well-intentioned, the NOPEC bill poses multiple risks with little to no promise of any real reward. Put simply, American energy – not foreign energy – is the best way to protect American families and businesses from those who would leverage energy for their own political gains.