Bipartisan federal commission would examine the oil cartel’s outsized influence over the unfree global oil market and offer policy recommendations to Congress.
Washington, D.C.—U.S. House of Representatives members Kevin Cramer (R-ND), Trent Franks (R-Ariz.), Collin Peterson (D-Minn.) and David Scott (D-Ga.) introduced legislation on Friday that would establish a one-year commission to better understand the role of OPEC, its member nations, and other national oil companies (NOCs) in contributing to an unfree global oil market. OPEC, whose member nations along with other NOCs control 90 percent of the world’s proven crude oil reserves, have the ability to exercise outsized influence over global oil supply, and therefore prices, to the detriment of non-members like the United States. The full text of H.R. 545 is available here.
OPEC’s decision in late 2016 to interrupt the low oil price environment by freezing crude production was reached after two years of the cartel maintaining record levels of production to consolidate market share. That policy placed significant strain on U.S. producers and the global economy, delaying nearly $400 billion in investment in future production capacity, causing thousands of domestic job losses and setting the stage for higher prices in the future. Unable to meet their fiscal obligations with declining oil revenues, major exporters are instead burning through billions in accumulated foreign reserves to maintain their social and defense spending, with the potential of amplifying already growing geopolitical unrest in the world’s most unstable regions.
“Understanding the vital role oil plays in the U.S. economy, the Energy Security Leadership Council applauds Congressmen Cramer, Franks, Peterson, and Scott for their bipartisan leadership in establishing a federal commission to investigate the market manipulation of OPEC members and other nationally owned oil companies,” said Frederick W. Smith, Chairman, President and CEO of FedEx Corporation and Co-chair of SAFE’s Energy Security Leadership Council. “By investigating OPEC’s history, analyzing the effects of the decisions made by the cartel and other NOCs on the U.S. economy, and putting forth recommendations to make America less vulnerable to the unfree oil market, we can make substantial gains in improving our country’s economic and national security.”
“America’s servicemen and women often carry the burden of securing oil supply lines around the world in order to protect the steady flow of oil, the lifeblood of the U.S. economy,” said General James Conway (Ret.), 34th Commandant of the U.S. Marine Corps and Co-chair of SAFE’s Energy Security Leadership Council. “Through the creation of the commission proposed by Congressmen Cramer, Franks, Peterson and Scott, America’s foreign policy and economic leaders can gain invaluable insight into the inner workings of the global oil market—which does not abide by free market principles—and how our country can best defend itself against the adverse impacts of decisions made by OPEC members and other national oil companies.”
OPEC’s strong influence over the oil market translates to severe economic vulnerability for the United States, which depends on petroleum fuels for more than a third of its primary energy demand and for 92 percent of the energy used by the transportation sector. This singular dependence on oil, a resource whose price is frequently volatile and unpredictable, threatens the American economy with the specter of price spikes and undermines the nation’s ability to conduct effective foreign policy, including military action, in its own interest.
As the world’s largest oil consumer, the United States is often forced to intervene in hostile situations to preserve the global flow of oil. A RAND Corporation study estimated the cost of U.S. involvement in securing oil supply infrastructure to be as high as $83 billion per year. If established, the OPEC Commission would consist of 16 members chosen by leadership in both houses of Congress and appointed by the President of the United States.
About Securing America’s Future Energy (SAFE)
Securing America’s Future Energy (SAFE) is an action-oriented, nonpartisan organization that aims to reduce America’s dependence on oil. Near-total dependence on petroleum in the transportation sector undermines the nation’s economic and national security, and constrains U.S. foreign policy. To combat these threats, SAFE advocates for expanded domestic production of U.S. oil and gas resources, continued improvements in vehicle fuel efficiency, and transportation sector innovations including electric vehicles, natural gas trucks, and autonomous vehicles. In 2006, SAFE joined with General P.X. Kelley (Ret.), 28th Commandant of the U.S. Marine Corps, and Frederick W. Smith, Chairman, President, and CEO of FedEx Corporation, to form the Energy Security Leadership Council (ESLC), a group of business and former military leaders committed to reducing the United States’ dependence on oil. Today, the ESLC is co-chaired by Frederick W. Smith and General James T. Conway (Ret), 34th Commandant of the U.S. Marine Corps.
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