 "Explainer: Antitrust law won't get in the way of U.S. acting to raise oil prices")
WASHINGTON (Reuters) - It is illegal for oil producers to meet to discuss pushing up oil prices under U.S. antitrust law, but perfectly legal if state regulators or the federal government set lower production levels for them, U.S. antitrust experts said on Friday.
That said, the decision by a Texas state official to talk with Saudi Arabia and Russia about supporting oil prices marks a sharp contrast with U.S. policy. A year ago President Donald Trump tweeted that OPEC needed to “increase the flow of oil. World Markets are fragile, price of Oil getting too high.”
A two-thirds drop in oil prices in the last three months has swiftly changed Washington’s thinking on whether or not it should meddle in the energy market.
Trump has called on top producers to stop a market rout caused by the coronavirus pandemic, as OPEC and its allies work on a deal for an unprecedented oil production cut equivalent to around 10% of global supply.
“Trump himself, other federal officials, and Congress cannot violate antitrust (law) by any official actions they take. It doesn’t apply to them,” said Chris Sagers, who teaches antitrust at the Cleveland-Marshall College of Law.
When oil prices are high, anti-OPEC bills, nicknamed NOPEC, gained traction in Congress. The bills would allow OPEC to be sued in U.S. courts for violating antitrust laws.
Impact Shorts
More ShortsSuch bills have been introduced in the U.S. Senate and House of Representatives for more than a decade, but have never succeeded. In February 2019, the latest version was approved by the House Judiciary Committee.
“From an antitrust perspective, businesses have been complaining about OPEC and complaining about these foreign systems for years,” said Barbara Sicalides, an antitrust expert at Pepper Hamilton LLP. “I don’t think it’s an antitrust violation. It’s certainly a change in policy.”
Oil prices have fallen to around $20 per barrel from nearly $65 at the start of the year as more than 3 billion people went into a lockdown, reducing global oil demand by as much as a third.
Texas regulator Ryan Sitton, one of three members of the Texas Railroad Commission, waded into oil diplomacy on Thursday, calling Russia’s energy minister to discuss possible oil production curbs and angling for talks with Saudi Arabia as many producers in the U.S. state’s biggest industry warned it was near collapse.
The Oklahoma Energy Producers Alliance has urged its state’s regulator to curtail crude oil production.
This kind of conduct in private industry would not be permitted, but under the state action doctrine it is allowed if it is done under the commission’s authority, said Sicalides.
(Reporting by Diane Bartz; Editing by Daniel Wallis)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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