Anti-OPEC Move.

Decrying near-record high gasoline prices, the House on May 22 voted 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 fuel costs at the pump. OPEC accounts for 40% of the world's oil production.

Judiciary Committee Chairman John Conyers, D-Mich., the bill's chief sponsor, was on May 23 quoted as saying: "We don't have to stand by and watch OPEC dictate the price of gas[oline]", reflecting the frustration US lawmakers felt over their inability to address people's worries about high summer fuel costs. The measure passed 345-72. A similar bill was awaiting action in the Senate.

Separately, at a House hearing, US lawmakers were told that crude oil prices had 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. Guy Caruso, chief of the Energy Department's statistical agency EIA, told the House Energy and Commerce investigations subcommittee that gasoline prices "may ease somewhat". But he said pressure on gasoline prices will remain strong "with the hurricane season approaching, continued tight refinery conditions, low gasoline inventories and increased demand for summer travel".

Nevertheless, the House felt it was important to take on OPEC, which in late 2006 cut its crude oil production by 1.1m b/d to counter what had been a build-up of world oil stocks. Conyers accused OPEC of engaging in a "price fixing conspiracy" which had "unfairly driven up the price" of crude oil and, in turn gasoline. His measure would change anti-trust laws so that the US Justice Department can sue OPEC member-states 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 states 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 US 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, adding: "If gasoline prices remain this high it is going to have a significant impact on the economy".

US lawmakers have been frustrated over their inability to counter the surge in gasoline prices which recently averaged just under $3.22 cents/gallon, within a half penny of an historically inflation-adjusted high in March 1981.

As the House Energy and Commerce investigations subcommittee began a hearing on gasoline prices and oil industry consolidation, Rep. Ed Whitfield, R-Ky., said: "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". Rep. Bart Stupak, D-Mich., the panel's chairman, told of a person in his district complaining that gasoline had increased 21 cents/gallon over 10 hours in the previous weekend. But the latest price surge at the pump has had less to do with OPEC oil production levels than strong demand for gasoline, not only in the US but also in Europe, and refinery problems which have cut into gasoline production as well as imports.

William Kovacic, a member of the Federal Trade Commission, told Stupak's subcommittee: "Increased crude oil prices have played a relatively minor role in [the recent] increase in retail prices". He said the price of WTI rose no more than 15 cents/g over the last three months, while retail gasoline prices jumped 80-90 cents/g, depending on location. Stupak said: "Big Oil is often quick to blame world crude oil prices, but that argument doesn't appear to be the full story". He said "while consumers pay record prices, oil companies are making record profits".