Average Gas Prices Hit All Time High: How Congress Must Now Act to Reduce Runaway Oil/Gasoline Prices

In a little noticed event reported in the Wall Street Journal last week, the United States arrested eight non American executives involved in connection with an international cartel accused of fixing prices for industrial rubber hose. Industrial hose is employed to transfer oil between tankers and storage facilities. Between 1999 and 2007, hundreds of millions of dollars worth of industrial rubber hose were purchased by the Defense Department, and an array of oil companies including Royal Dutch Shell, Exxon Mobil leading the Justice Department to invoke the U.S.'s tough criminal laws against cartels.

Industrial rubber hose? What does that have to do with the price of gasoline? Very, very little in the scheme of things. But, wait, what about the Justice Department and those criminal laws against cartels, and the oil flowing through that industrial rubber hose. Now, perhaps we are on to something.

The industrial rubber hose cartel may well be effective, but, no offense meant to the rubber hose industry, it is mickey mouse compared to the granddaddy of all cartels, the Organization of Petroleum Exporting Countries (OPEC) happily gouging us for the oil flowing through all that industrial rubber hose everywhere. And what has our vigilant Justice Department and our oil industry ambassadorial headquarters, the Department of Energy, or our Federal Trade Commission done about that cartel -- well the answer is zero, zip, nothing and then some, forever trying to sweep OPEC's pricing machinations under the "it's all attributable to the forces of the marketplace" carpet. And in a style reminiscent of that American hero, Alfred E. Neuman, a communal shrug pointing to the great OPEC loophole of sovereign immunity, meaning since the OPEC banditry devolves from state-owned companies and resources, our anti trust laws can not be applied. So don't worry, be happy. Smile at the pump. Certainly Shell and Exxon Mobil do when the gas is flowing the other way.

Well wait, it needn't be that way. Why should OPEC be given a free pass. That question has been kicking around Congress since 1978 when the International Machinists and Aerospace Workers sued OPEC. The suit was thrown out by the courts who in their 'wisdom' decided that OPEC was protected against lawsuits by the foreign sovereign immunity doctrine, as though it was Saudi King Abdullah himself who was pumping gas at the local gas station.

Then in 2005 a bipartisan group of Senators led by then Senator Mike De Wine (R., Ohio) and Senator Herb Kohl (D., Wisc) introduced the No OIL Producing and Exporting Cartels Act (called the NOPEC Bill) designed to give the Justice Department and the Federal Trade Commission explicit powers to process legal action against OPEC's collusion in manipulating oil prices. The Senate Judiciary Committee unanimously advanced the bill to the full Senate, while a companion bill was introduced in the House. The measure was eventually killed in House Senate negotiations over the administration's energy bill.

Why? One can readily conjecture oil patch influence played a major role. Remember the more successful OPEC is at pushing up prices, the fatter the bottom lines of the oil industry and their friends. And certainly, this administration is going to do nothing to cause OPEC to play by market rules. Their friends in the oil industry would feel betrayed. As to the rest of the American consuming public, well let them spend billions more for gasoline and petroleum products than they should (Please note: this is not an argumentation for greater consumption of fossil fuels, but rather an argument to lower the price that we pay for oil. These are two separate issues and need be dealt with as such).

That was then. This is now. Today we have a new Congress with leadership that has promised us a new direction. Here is an issue totally within their competence. If they don't act, one can only conclude that the new Congress is as riddled and influenced with oil money as was the previous Congress. Would it do any good? Probably. Just in its very doing it would send a powerful signal of this nation's displeasure with the manipulations of the cartel. Would the President veto such a bill with its provisions to bring OPEC into the sights of the Justice Department. Perhaps he might, after all he has been practicing his veto signature with flourish. But such a veto would be as shameful as a Congress not confronting him with that choice.