OPEC is Evil and Don’t You Forget It

October 23, 2008 by  
Filed under Economics

OPEC (Organization of the Petroleum Exporting Countries) is having another one of its meetings on October 24.  I hope that you will ignore what the OPEC PR machine is saying and will be saying about the purpose of the meeting.  Instead, please understand that the members of OPEC have one unstated agenda item that supersedes all others:  Consolidate economic and political power at the expense of U.S. taxpayers. 

OPEC has been around since 1960 and for that reason alone, some folks may have formed a belief that it is some sort of public interest economic entity or friendly fraternity of wealthy oil barons.  It’s none of the above.  Rather, it is a conspiracy of price-fixing monarchs, oligarchs, and despots, many of whom openly express their contempt for our economic and political systems.  

Who is OPEC?

The founding members of OPEC are Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.  Quatar, Indonesia, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador, and Angola have since signed on.  My favorites are Iran, Venezuela, and Libya because the leaders of those countries are so fond of us.  Fat boy Hugo Chavez is particularly striking in his red shirt when he stands in front of the UN General Assembly in New York, insulting our President. 

What is OPEC’s Mission? 

I have quoted below what OPEC states as its mission on its website.  For your benefit, I have added my expert translation in brackets. 

OPEC’s mission is to coordinate [conspire] and unify [fix] the petroleum policies [crude oil prices] of Member Countries [non-democratic fiefdoms] and ensure the stabilization of oil markets [make everyone obey us] in order to secure an efficient, economic and regular supply [by controlling supply] of petroleum to consumers [stupid capitalists and infidels], a steady income to producers [constant flow of billions to support our ostentatious lifestyles] and a fair return on capital to those investing in the petroleum industry [if you’re lucky we won’t nationalize your Yankee oil infrastructure in our countries].

I thnk my translation is much more accurate and direct, don’t you? 

Is OPEC Engaged in Lawful Behavior? 

Are you kidding?  Let’s start with the plain text of the Sherman Anti-Trust Act, which has been used over the years to bust many U.S. companies over the head and put their executives in jail: 

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. 

The Act also provides: 

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony

U.S. anti-trust conspirators have at least made an effort to hide their price-fixing activities.  OPEC doesn’t care.  They publish everything they do on their website and invite the press to meetings that would get U.S. citizens arrested on the spot. 

Now maybe you are wondering, why don’t we use the Sherman Act to bust OPEC up?  That’s a very good question.  It’s been tried several times over the years.  Unfortunately, the U.S. courts have ruled that OPEC had sovereign immunity and/or was not subject to liability because the illegal acts were undertaken by state actors.  Without delving into the legal intricacies of these defenses, they worked. 

However, these defenses are subject to being removed simply by amending the Sherman Act.  In fact, that’s what Congress has attempted to do, most recently in May 2008.  The bill was humorously called the NOPEC Act (No Oil Producing and Exporting Cartels Act of 2007).  It never made it to the President.  Why?  Because he promised to veto it.  In fact, President Bush has promised to veto any law that threatened OPEC.  Republicans backed him up.  Bunch of wusses.

Now I will concede that an enforcement action against OPEC countries is unlikely to do much for oil prices.  Why?  Because OPEC members will either retaliate economically or simply conspire off the record to continue to do what they have been doing on the record.  Nevertheless, I would really enjoy a nice anti-trust lawsuit against the Venezuelan oil company, starting with all of the Citgo stations it owns in the U.S.  In fact, if we could use such a lawsuit to de-power that buffoon Hugo Chavez, I wouldn’t mind paying a little more for my gasoline. 

Anyway, please join Mr. ToughMoneyLove in maintaining a suitable level of animosity against OPEC as its members go through the motions of further tightening the screws down against our economy.   And please don’t purchase Citgo gasoline.


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Comments

18 Responses to “OPEC is Evil and Don’t You Forget It”
  1. ^_~ says:

    wait… so OPEC is evil because it pursues its own interests?
    and you, a lawyer, are telling me that the united states can pass laws against OTHER COUNTRIES?

    wat!?

  2. OPEC is not a single entity. It’s a conspiracy of independent entities agreeing to fix prices by controlling supply. And yes, we can pass laws against other countries if those countries engage in commercial activities in the US through commercial enterprises.

  3. ^_~ says:

    I think you would be paying *a lot* more for your gasoline if the U.S. decided to actively give OPEC the finger. Complete dependence is fun like that.

  4. CJ says:

    You know year after year I watch people struggle to scrape together gas money. I don’t get it. I’m 26 and I’m looking at buying my very first gas powered vehicle in the next year and it’s probably going to be a 150cc scooter or motorcycle.

    Citgo isn’t the only member of the oil beast. They’re all in cahoots in this country and in other countries, where gas can be as much as $10 US a gallon. Just stop feeding the beast.

  5. CJ – I would love to stop feeding the beast. My next vehicle will be electric, as soon as they refine the technology and get the mileage limits up to 150 miles/charge.

  6. Andrea says:

    Evil, and yet we sit at their feet and worship the oil they give us. Seems to me that we’re a pretty dense bunch of cats, don’t you think?

  7. Andrea – We are either dense or our addiction to oil prevents us from seeing or thinking clearly on this issue.

  8. Andrea says:

    Densely addicted. I also think people don’t realize how pervasive petroleum us. We always talk about gas for cars, but a few months ago I wrote a short post about all of the other places you find petroleum based products … it was a short post, but a LONG list. And then of course the manufacturing, processing, transport, blah blah blah … it’s all cumulative.

  9. deepali says:

    Well, it’s a bit like blaming your drug dealer for upping his prices, isn’t it? Seems like the solution might be to invest more of our money in non-oil energy production and just break the habit all together.

    Also, I’m not sure that OPEC violating the Sherman Act is relevant. I mean, OPEC (and its member countries) are not subject to US laws. And changing the act still wouldn’t do anything to OPEC. It would however affect US oil companies, which might explain Bush’s veto. Also, his close ties with the House of Saud probably help too. in effect, we won’t have an effect on Libya and Iran, but we will be harming our own businesses (which I’m not arguing against, necessarily).

    As for Citgo – they have the lowest prices in town. Why not start with Exxon or Chevron? American companies bilking the American consumer piss me off more than a loud-mouth from another country.

    But while we’re on the topic – we engage in a number of price-fixing activities that screw over other countries (and violate WTO regs for that matter). Agriculture is a big example. Isn’t this a double standard?

  10. deepali – All your points are good ones except I do not agree that the US engages in agricultural price fixing except through subsidies which are used everywhere (and should be eliminated). There simply is no organization that is so blatantly anticompetitive as OPEc.

  11. goldenrail says:

    I don’t really have an opinion on OPEC in general. My basic approach is just to walk as much as possible. However, since I am currently living in (and working for) the Federal Republic of Nigeria, a non-fiefdom democracy, I feel the need to comment a bit on your translation of OPEC’s mission.
    Nigeria is a capitalist society. Even it’s tribal societies before colonization were arguably capitalist. Yes, the former military government did nationalize pretty much everything. But the current democratically elected government is very supportive of foreign companies and foreign investment.
    I also do not think we as Americans can criticize the lifestyles of people in these often war-ravaged, mostly second- and third-world countries as “ostentatious.” Even the very wealthy people have to deal with things the absence of which Americans take for granted. I’m staying with a well-off family in the capital city. Our power goes off at least once a day. Even at the federal building where I work we have power outages and the already sluggish internet goes off for weeks at a time. There’s also the unpaved roads, horrible road safety conditions and frightening parasites.
    OPEC’s control of the world’s oil doesn’t seem that different than the ways in which developed countries control the world’s IP to the detriment of developing countries. In a previous post you even commented that America should be developing more technology and patenting it so that “we can make other countries pay us for using it.” We have the IP, so we control it. They have the oil, so they control that.
    I would also like to know how, and why, US law should be applied to an international organization.

  12. Andrea says:

    Thanks for that comment, goldenrail – I found it very interesting.

  13. John says:

    The only impact legal action against CITGO stations would have is hurting local businesses in America. CITGO itself does not own or operate any stations. Each and every CITGO station in the United States is locally owned and independently operated. Money spent at local stations goes to independent business owners who supply jobs to hard-working Americans in their communities and pay taxes to support local, state, and federal programs. In addition, owners and operators of local CITGO stations give a tremendous amount back to their communities through charity and community programs. Those communities are who would be hurt if people stopped buying gas at CITGO stations. And that’s not good for anyone.

  14. John: Thanks for your visit and comment. I understand your point about ownership of CITGO stations but that does not change the fact that the CITGO brand (which franchises and supplies fuel to the stations) is 100% owned by Petroleos de Venezuela, which in turn is owned by the Venezuelan government. So, ultimately, purchases of gas at CITGO stations in the US feed profits into the Venezuelan treasury. That wouldn’t be so bad except that Venezuala is a founding member of OPEC and is run by an autocratic, anti-American socialist, Hugo Chavez.

  15. Andrea says:

    If you stop purchasing gasoline from Citgo, what do you think would happen to all of that gasoline and oil?

  16. Andrea: If everyone stopped buying from CITGO, that gas/oil would be sold elsewhere (outside the US) which would likely dramatically increase distribution costs and lower profits for Petroleos de Venezuela, and thereby decrease the amount of money that Chavez has available to prop up his anti-democratic rule.

  17. Andrea says:

    Hmm. I don’t know if that’s true, but at least you didn’t give the standard e-mail chain letter reply answer that it’d somehow destroy OPEC. :)

  18. Andrea – As long as OPEC countries control so much oil, we will cannot destroy it all at once. However, picking off the worst of the members (such as Venezuela) one by one would be worthwhile in that it would send a message to the others that they should not use their oil as leverage to support harsh anti-American properties.

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