Grassley is an original co-sponsor of the bipartisan initiative titled NOPEC, or the No Oil Producing and Exporting Cartels Act, introduced by Sens. Herb Kohl and Mike DeWine.
Grassley said it is "totally unacceptable that OPEC can engage in protected price-fixing and oil production fixing. If these nations had been a group of international private companies rather than foreign governments, they would have been hauled into court and found guilty a long time ago," he said.
The proposed legislation would authorize the Department of Justice and the Federal Trade Commission to bring lawsuits against oil cartel members for antitrust violations. It would clarify that what's known as the "Act of State" doctrine would not prevent a court from ruling on antitrust charges brought against these foreign governments for engaging in illegal pricing, production and distribution of petroleum products.
OPEC's actions are now protected by the Foreign Sovereign Immunities Act, which allows prosecution of foreign governments when they are engaged in commercial activity but prohibits prosecution if those states are engaged in governmental activity. A 1979 federal district court decision said that OPEC is engaged in governmental rather than commercial activity when it fixes prices and sets crude oil production limits.
"This decision was a mistake that lets oil producers hide behind state-owned enterprises in order to tamper with the free-market system and engage in price fixing or other illegal anti-competitive activities," Grassley said. "We need to change the law to make clear that such flagrant antitrust violations will not be tolerated." The bill introduced Thursday falls under the jurisdiction of the Senate Judiciary Committee, where Grassley serves as the second most senior member.
On Wednesday, Grassley met on Capitol Hill with representatives of the American Petroleum Institute and four Midwest oil refineries, as well as EPA Administrator Carol Browner. He questioned the industry for inordinate gasoline prices in Iowa and other states and the failure of the Clinton-Gore administration to respond aggressively.
In addition, Grassley criticized Browner for delaying a decision to deny California's request to waive out of the oxygenate requirement in reformulated gasoline. He pointed out that replacing MTBE with ethanol in the reformulated gasoline market would decrease the country's dependence upon foreign energy, expand the use of ethanol and increase farm income by $1 billion a year. Browner would not commit to a deadline for the decision.
Last week, Grassley called on the FTC to investigate the oil industry and urged President Clinton to tap the Strategic Petroleum Reserve. In March, Grassley introduced a bill that would require the President of the United States to cut off foreign aid and arms sales to countries engaged in oil price fixing.
"American consumers are paying the price for the poorly-constructed energy policy of the last seven years. The administration left the public vulnerable to price gouging by the oil industry and set the state for today's gas price crisis. Now that the situation has escalated, the president and vice president need to take every action possible to address it immediately," Grassley said.
For the long-term, Grassley said "we need to accelerate efforts to promote and use alternative sources of energy. We need to protect ourselves from being held hostage in the future by oil-rich nations. Homegrown sources will lessen our dangerous and expensive dependence on finite, foreign petroleum products and protect the environment," he said.
Grassley has been a leading advocate for expanded use of clean-burning ethanol, soy diesel, wind energy, and biomass
.A preliminary analysis by the Department of Energy found that if the U.S were to achieve a goal set in the Energy Policy Act of 1992 to replace 10 percent of fossil fuels with alternative fuels, oil prices could be reduced by $3 a barrel. Since the U.S. now consumes 7.1 billion barrels of oil every year, the resulting savings to consumers would be about $21 billion a year.
Already, the 3.6 percent market share held by alternative fuels reduces the cost of each barrel of oil by a dollar. Factoring in consumption levels, the result is a savings of about $7 billion a year.