OT: Bush, U.S. Congress clash over OPEC
Oil cartel increases output
From Laolu Akande (New York), Yakubu Lawal (Vienna, Austria)
- x The Guardian -
A POWER tussle is brewing between the George W. Bush administration and the United States (U.S.) Congress over the continued existence of the Organisation of Petroleum Exporting Countries (OPEC).
The cartel however appeared unperturbed by the development yesterday as it agreed to increase its production output by 500,000 barrels per day. By the decision, Nigeria's result in daily output may rise by 40,000 barrels.
The U.S. Senate has joined the country's House of Representatives in passing a bill that seeks to declare OPEC illegal. But the Bush administration has faulted the bill, arguing that it could only isolate the U.S. and hurt its citizens. The executive arm also gave indications that the bill might be vetoed.
A statement made available yesterday from the Executive Office of the U.S. President said that Bush's "senior advisors would recommend that he veto the bill."
The two U.S. Congress chambers would still have to set time to meet on the bill in a joint conference before sending it to the White House.
As at yesterday, the Congress had not forwarded the bill to the White House. The Press Secretary for Senator Herb Kohl said that the bill sponsor in the Senate, Joe Bonfiglio, said the House and the Senate would be raising the issue in their joint conference later. He added that for now, the focus of the Congress was on the appropriation bills. "Everyone is trying to pass appropriation bills now," he said, explaining the delay of action since the bill passed the Senate in June.
But Bonfiglio asserted that it would be difficult for the U.S. president to veto the bills since they were passed at both the House and the Senate with overriding majority. A presidential veto can be upturned by the U.S. Congress by two-thirds of the members of each house voting.
But OPEC yesterday in Vienna, Austria, increased production by 500,000 barrels per day (b/d) effective from November 1, 2007, bringing the total crude oil output to over 27.2 million b/d.
Following the increase in production, Nigeria's total output may go up by eight per cent to 40,000 b/d.
Sheik Abdalla el Badri, the Secretary-General of OPEC, made the disclosure while addressing a press conference after the 145th meeting of the organisation's conference. The conference noted that the high demand winter season necessitates keeping the market adequately supplied.
"To this end, the conference decided to increase the volume of crude supplied to the market by OPEC member-countries (excluding Angola and Iraq) by 500,000 b/d, effective November 1, 2007," he said.
The conference had earlier reviewed the current oil market conditions and prospects. It observed that actions taken by OPEC member-countries to increase production over the preceding several years have led to a comfortable build-up in inventory levels, especially of crude.
It also noted that developments in the U.S. products market had continued to affect the level of product stocks and prices.
The conference also reaffirmed its long-standing commitment to ensuring sound supply fundamentals at all times and to offer an adequate level of spare capacity for the world at large.
"The conference also recorded the readiness of member-countries to swiftly respond to any developments which might jeopardise oil market stability and their interests. For this purpose, the conference agreed to reassess the market situation at its 146th (Extraordinary) Meeting to be held in Abu Dhabi, UAE, on December 5, 2007.
The conference also elected Dr. Chakib Khelil, Minister of Energy and Mines of Algeria and Head of its delegation, as President of the conference for one year, with effect from January 1, 2008, and Mr. Desiderio da Gra?a Verissimo e Costa, Minister of Petroleum of Angola and Head of its delegation, as Alternate President, for the same period.
The conference appointed Dr. Falah J. Alamri, Governor for Iraq, as Chairman of the Board of Governors for 2008, and Miss Siham A. Razzouqi, Governor for Kuwait, as Alternate Chairman for the same period, with effect from January 1, 2008.
The conference decided that the next ordinary meeting would hold in Vienna, Austria, on Wednesday, March 5, 2008.
Before the increase in output, Nigeria's production allocation stood at 2.3 million b/d, however, owing to the situation in the Niger Delta leading up to production shut-ins, production figures fluctuate between 2.1mb/d and 2.2million b/d.
The bill was passed at the House with an overwhelming bi-partisan support of 345 votes for, 72 against, and 15 abstentions. The bill at the Senate, in a different, summarised version, being part of a bigger bill, was passed with a similar bipartisan support of 70 votes for and 23 against.
But a White House press office official Micah Harris said yesterday that "if the Senate included the same legislation (as the House has done in S. 879 - the name given the bill by the senate), I think you could assume that the administration position would be the same," referring to the White House statement made available yesterday but previously released.
The White House stated that the Bush administration "strongly opposes" the passage in the U.S. House of Representatives of the No Oil Producing and Exporting Cartels Act of 2007.
According to the White House statement issued by the Office of Management and Budget in the Executive Office of the President, "this bill has the potential to lead to oil supply disruptions and an escalation in the price of gasoline (petrol), natural gas, home heating oil, and other sources of energy."
The Bush administration expressed support for "a market-based international energy trade and investment system, in the same spirit with the U.S. House of Representatives."
However, the administration "believes that the appropriate means for achieving that objectives lies in diplomatic efforts by the United States with countries involved in that trade, rather than lawsuits."
In backing the bill, the Senate had decided to include the House version of a separate bill into another Senate version which deals more broadly with the issue of energy. The Senate version that was passed in June about a month after the House passed NOPEC was entitled: "Renewable fuels consumer protection, and energy efficiency Act of 2007." The NOPEC aspect was then placed as Section 710.
That section states that "No Oil Producing and Exporting Cartels Act of 2007 or NOPEC...prohibit any foreign state, or entity from taking specified actions in restraint of trade (including setting prices) when such action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution of oil, natural gas, or other petroleum product in the United States." The act also empowers the attorney-general to enforce it.
That position, according to the White House statement made available yesterday, observed that such a legislation would result "in a targeting of foreign direct investment in the U.S. as a source of damage awards and would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to U.S. refiners."
The statement insisted that "such a result would do little to achieve a free market in international trade in petroleum, would substantially harm other U.S. interests abroad, and would strongly discourage investment in the U.S. economy."
The U.S. executive arm of government does not agree with the strategy of its legislative arm of government in solving what is clearly a huge issue of concern to Americans considering the rising cost of oil prices which the Americans link directly to OPEC, it added.
The bill declares as illegal the activity of OPEC of which Nigeria is a prominent member. By the proposed law, the U.S. legislators hope to remove the one voice with which the cartel has succeeded so far in determining the prices of the product at the international market.
It is, however, unclear how the proponents of the law hope to force their will on "erring OPEC members," although the assets of the cartel's members in the U.S. are subject to court action, including seizure or confiscation.
The bill provides for court action against the indicted countries in the U.S. and denies the "accused state" - or may be respondent, if the action is by way of petition - sovereign immunity.
John Conyers, the U.S. Congressman who originated the bill in the House of Representatives expressed the worry of several Americans that the prices might go further up as the nation prepares for the summer season, which is the busiest driving time in the U.S.
Said Conyers: "We are told this won't be the end of these skyrocketing price hikes either. The ... forecasts (are) that more record prices are probably on the way, especially at the summer. When the bill moved to the U.S. Senate, it got the instant support of two leading senators from the Democratic Party, Patrick Leahy from the state of Vermont and Herb Kohl, from Wisconsin.
OPEC member-countries, generating well over 40 per cent of world's oil production are also known to hold at least two-thirds of the worlds oil reserves.
OPEC members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
The bill declares as illegal "for any foreign state or instrumentality thereof to act collectively or in combination with any other foreign state or any other person, whether by cartel or any other association or form of co-operation or joint action, to limit the production or distribution of oil, natural gas, or any other petroleum product, to set or maintain the price of petroleum, or to otherwise take any action in restraint of trade for petroleum, when such action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution of petroleum in the United States."
The bill "denies a foreign state engaged in such conduct sovereign immunity from the jurisdiction or judgments of U.S. courts in any action brought to enforce this Act."
It continues: "No U.S. court shall decline, based on the act of state doctrine, to make a determination on the merits in an action brought under this Act."
It authorises the U.S. Attorney-General "to bring an action in U.S. district court to enforce this Act."
For several years, U.S. lawmakers have been known to be much opposed to the idea of OPEC, even though the cartel's leaders, especially the Saudi Arabians, are known to have struck a deal with the U.S. government in the early '60s and '70s to denominate the price of oil in dollars, an agreement that raised the status of the dollar then as the ultimate internationally convertible currency.
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