US legislation NOPEC- To tackle high fuel prices

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US legislation NOPEC- To tackle high fuel prices: Relevance for UPSC Exam

General Studies III- Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

US legislation NOPEC- To tackle high fuel prices: Context

US legislation NOPEC which could open members of oil producing group OPEC+ to antitrust lawsuits has emerged as a possible tool to tackle high fuel prices.

What is US legislation NOPEC?

NOPEC stands for No Oil Producing and Exporting Cartels (NOPEC).
It is a bill to protect US consumers and businesses from engineered oil spikes.
But some analysts warn that implementing it could also have some dangerous unintended consequences.

US legislation NOPEC: Need

OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, agreed to steep production cuts, curbing supply in an already tight market.
After the decision, the US decided to reduce the group’s control over energy prices.

US legislation NOPEC: Key features

The bipartisan NOPEC bill would tweak US antitrust law to revoke the sovereign immunity that has protected OPEC+ members and their national oil companies from lawsuits.
If signed into law, the US attorney general would gain the option to sue the oil cartel or its members, such as Saudi Arabia, in federal court.
It is unclear exactly how a federal court could enforce judicial antitrust decisions against a foreign nation.

US legislation NOPEC: Historical Background

Previous versions of the NOPEC bill have failed amid resistance by oil industry groups, including the top US oil lobby groups.
Saudi Arabia has rebuffed repeated lobbying during visits by Biden officials not to cut production.
Instead, OPEC+ has agreed to cut output by the most since the start of the COVID-19 pandemic.

US legislation NOPEC: Implications

NOPEC more or less is a knee-jerk reaction from the US against oil hegemony of the OPEC+.
If passed into law, it could lead to unintended blowback.
In 2019, for example, Saudi Arabia threatened to sell its oil in currencies other than the dollar if Washington passed a version of the NOPEC bill.
There is a possibility that other countries could take similar action on the US for withholding agricultural output to support domestic farming, for example.