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Senate Approves DeWine, Kohl Amendment to Permit U. S. Legal Action Against OPEC for Manipulating Petroleum Market

Location: Washington, DC


Senators' Legislation Added to Energy Bill

The U.S. Senate today approved an amendment sponsored by Senators Mike DeWine (R-OH) and Herb Kohl (D-WI) to permit the U.S. Department of Justice and the Federal Trade Commission to bring actions against foreign states -- such as members of the Organization of Petroleum Exporting Countries (OPEC) -- for collusive practices in setting the price or production of petroleum products. The amendment was added to the Energy Bill by a voice vote. Senator DeWine is the Chairman of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights and Kohl is the ranking member.

"Simply put, gas and oil prices are too high, and it is time that we step forward and do something about it," stated Senator DeWine. "From home heating oil, to higher prices at the gas pump and rising jet fuel prices for our airline industry, high fuel costs are echoing throughout the economy and causing damage everywhere."

"Real people suffer real consequences every day in our nation because of OPEC's actions," Senator Kohl said. "Rising gas prices are a silent tax that takes hard-earned money away from Americans every time they visit the gas pump. Higher oil prices drive up the cost of transportation, harming thousands of companies throughout the economy from trucking to aviation. And those costs are passed on to consumers in the form of higher prices for manufactured goods. Higher oil prices mean higher heating oil and electricity costs. Anyone who has gone through a Midwest winter can tell you about the tremendous costs associated with higher home heating bills."

In 1979, a federal district court found that OPEC's price-fixing decisions were "governmental" -- not "commercial" -- acts and accordingly they were protected by the Foreign Sovereign Immunities Act. Subsequently, in 1981, a federal court of appeals declined to consider the appeal of that antitrust case based on the so-called "act of state" doctrine, which holds that a court will not consider a case regarding the legality of the acts of a foreign nation.

NOPEC effectively reverses these decisions by making it clear that OPEC's activities are not protected by sovereign immunity and that the federal courts should not decline to hear such a case based on the "act of state" doctrine. It clears away these judicially-created roadblocks so the Department of Justice or Federal Trade Commission could bring an antitrust case against OPEC for its price-fixing behavior.

Senator DeWine and Kohl's legislation will force OPEC to begin pricing in a competitive, free market manner or face the possibility of being prosecuted for civil or criminal antitrust violations.

The bipartisan amendment was co-sponsored by Senators Arlen Specter (R-Pennsylvania); Patrick Leahy (D-Vermont); Charles Grassley (R-Iowa); Russell Feingold (D-Wisconsin); Tom Coburn (R-Oklahoma); Charles Schumer (D-New York); Dick Durbin (D-Illinois); Olympia Snowe (R-Maine); Carl Levin (D-Michigan); Barbara Boxer (D-California), Ron Wyden (D-Oregon); Lindsey Graham (R-SC); Tom Harkin (D-IA); Edward Kennedy (D-MA); Mark Dayton (D-Minnesota); and Frank Lautenberg (D-New Jersey).

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