DOE Chief Perry: OPEC Bill Could Spike Oil Prices

Thursday, February 28, 2019

The United States needs to be cautious about pending legislation that would allow the Justice Department to sue OPEC and other oil producers over supply cuts because it could result in higher prices in the long term, U.S. Energy Secretary Rick Perry said on Thursday.

"We need to be really careful before we pass legislation that may have an impact that goes way past its intended consequences," Perry said at a news conference.

The bill could curtail supply management by oil producers in global markets, possibly leading to a petroleum glut and lower prices. That could have the unintended effect of eventually pushing many producers out of the market, which would send prices back up, Perry said.

The House Judiciary Committee unanimously passed on Feb. 7 a bipartisan bill known as the No Oil Producing and Exporting Cartels Act, or NOPEC.

The legislation would change U.S. antitrust law to revoke the sovereign immunity that has long protected OPEC members from U.S. lawsuits. It allows the Department of Justice to sue the oil producers group or any of its members on grounds of collusion.

A similar bill was introduced by Senator Chuck Grassley, a Republican of Iowa, the top corn-producing state, and a proponent of the corn-based motor fuel ethanol, and Senator Amy Klobuchar, a Democrat.

Versions of the bill have come up in Congress for the last 20 years. A bill passed in 2008, but President George W. Bush never signed it into law.

Oil prices have been generally rising this year as OPEC and Russia stick to supply cuts despite pressure from U.S. President Donald Trump.

Last week a senior administration official said, "We do not support market-distorting behavior, including cartels,” when asked whether Trump would support the NOPEC bill.

Trump wrote on Twitter this week: "Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!"

Oil traded in New York rose 2.6 percent to $56.94 a barrel on Thursday, after U.S. inventories fell and as Saudi Arabia brushed aside Trump's comments.

But U.S. crude oil production has risen by more than 2 million barrels per day over the past year to a record 12 million barrels per day, helping to keep markets balanced.

Fatih Birol, executive director of the International Energy Agency, said upcoming U.N. rules to cut sulfur content of shipping fuels, known as IMO 2020, could have some impact on fuel prices, but nothing long-lasting.

"This will be definitely a challenge, but at the same time we know that the refinery industry ... (is) taking measures to adjust themselves to the new conditions," Birol said at the news conference.

Perry, asked if the administration has concerns about IMO 2020, said Trump is always concerned about the potential for oil price spikes.


Reporting by Timothy Gardner

Categories: Legal Energy Government Update Offshore Energy Shale Oil & Gas Renewable Energy Drilling Activity

Related Stories

Velesto’s Jack-Up Rig Up for Drilling Job Offshore Vietnam

Turkey Discovers New Black Sea Gas Reserve

Chuditch Gas Field Up for Summer Drilling Ops as Sunda Reshapes Ownership Structure

Hanwha Drilling’s Tidal Action Drillship En Route to Petrobras’ Roncador Field

Sunda Energy Starts Environmental Consultation for Chuditch-2 Well Drilling Plans

Eneos Scoops Jack-Up Drilling Contract Offshore Vietnam

Woodside to Shed Some Trinidad and Tobago Assets for $206M

ORE Catapult and Japan’s FLOWRA to Jointly Advance Floating Wind

Shell Hires Noble’s Drillship for Work in Southeast Asia

Eco Wave Finds Partner for Wave Energy Project in India

Current News

OMV Exits Ghasha Gas Project off UAE with Lukoil Stake Sale

China's Sinopec Laucnhes $690M Hydrogen Venture Capital Funds

CIP, ACEN Partner Up for First Large-Scale Offshore Wind Farm in Philippines

Valeura Concludes Eight-Well Drilling Campaign in Gulf of Thailand

Three Dead in Chevron's Angolan Oil Patform Fire

BW Opal FPSO Vessel set for Work off Australia

Keyfield Ventures into Indonesia’s Oil and Gas Market with New Partner

Fire Contained at Vietnamese Oil Platform Undergoing Decommissioning (Video)

Velesto’s Jack-Up Rig Set for Drilling Job off Indonesia

Petronas, Inpex Secure Oil and Gas Exploration Rights off Indonesia

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com