Faced with a never ending spiral of price hikes and supply concerns, failing political influence in emerging markets and an unavoidable torpor in the domestic economy, America decided to do what America does best: Sue the bastards.
Last month the House of Representatives passed the Gas Price Relief for Consumers Act of 2008, effectively allowing the American government to sue foreign states for violating antitrust laws. The act was welcomed by the public and the LA Times has a fascinating article arguing for legal action, citing British Airways and Korean Air’s $600 million fine for fixing international cargo rates.
The democrats who raised the bill didn’t have long to celebrate though, as President Bush threatened to veto and the senate republicans filibustered the bill, killing it before it ever really lived.
The threat of fining OPEC may just have been American posturing, a token gesture of action by an otherwise helpless government, but it was not taken kindly by Libya, who threatened to cut supply. This threat raised the price of crude to over $140 earlier this week. Fortunately, it too appears to have been national posturing, and now that a calm has settled on both sides, Qatar has weighed in on the important issue of supply affecting prices.
Qatari Oil Minister Abdullah al-Attiyah argues that the oil market is currently over-supplied, but the mention of cutting supplies would send traders in to an irrational frenzy. “”I never get a call from my customers asking for more supply but we always hear concerns about high oil prices.” he said last week, ”This shows there is no correlation between the oil price and supplies.”
It is becoming clear that OPEC has very little to do with the current price of oil, and suing them now wouldn’t be the best idea. Perhaps when the new president has been elected he can begin a new era of negotiations with a host of suppliers but until November very little can be done. Helplessness never feels great, but sometimes the long arm of the law just can’t stretch half way across the world.
“The Congress should look to increase exploration inside the United States,” said Attiyah. “It is strange to ask what I should produce. It’s an issue of sovereignty.”
