Washington, D.C. – U.S. House of Representatives members Trent Franks (R-Ariz.), Collin Peterson (D-Minn.), and Kevin Cramer (R-ND) introduced legislation that would establish a commission to better understand the role of OPEC, its member nations, and other national oil companies (NOCs) in the maintenance of an unfree global oil market. OPEC, whose member nations along with other NOCs control 90 percent of the world’s proven crude oil reserves, are able to exercise outsized influence over global oil supply, and therefore prices, to the detriment of non-members like the United States. Full text of HR 4559 available here.
OPEC’s outsized influence over the oil market translates to severe economic vulnerability for the United States, which depends on petroleum fuels for over a third of its primary energy demand and for 92 percent of the energy used by the transportation sector. This overwhelming dependence on a single resource, the price of which is volatile and uncontrollable, threatens the American economy with the specter of price spikes and severely hinders the nation’s ability to conduct foreign policy, including military action, in its own interest.
“Understanding the vital role oil plays in the U.S. economy, the Energy Security Leadership Council applauds Congressmen Franks, Peterson, and Cramer 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 Franks, Peterson, and Cramer 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 decision in 2014 to consolidate market share by maintaining record levels of crude production has placed strain on U.S. producers and the global economy, delaying nearly $400 billion in investment in future production capacity, resulting in thousands of job losses and setting the stage for higher prices in the future. Unable to meet their fiscal obligations with declining revenues, major oil 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.
As the world’s largest oil consumer, the United States is often forced to intervene in hostile situations to preserve the 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. Understanding the importance of preserving American lives and taxpayer dollars, the 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 a nonpartisan organization that aims to reduce America’s dependence on oil and improve U.S. energy security to bolster national security and strengthen the economy. SAFE advocates for expanded domestic production of U.S. oil and gas resources, continued improvements in fuel efficiency, and in the long-term, breaking oil’s stranglehold on the transportation sector through alternatives like natural gas for heavy-duty trucks and plug-in electric 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.
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