Politics

Report: Suing OPEC Is Not Possible and Won’t Lower Prices

Click here to read a memo from the Congressional Research Service (CRS) regarding the concept of suing foreign states for antitrust violations. Although a bit broad and technical the memo does point to the simple fact that suing OPEC seems to be nothing more than a fallacy (stating two reasons why ?No action could be brought against OPEC, the organization?) and not a realistic option. Furthermore it appears the United States District Court for Central California found (in 1979), inter alia, that neither the OPEC states nor OPEC itself could be sued:
?The United Nations, with the concurrence of the United States, has repeatedly recognized the principle that a sovereign state has the sole power to control its natural resources.?

Regarding current high crude oil prices the memo states:
?In the long term, it is unlikely that oil prices will fall unless large amounts of new supply enter the market.? and ?However, many other nations, including those that are not OPEC members, have also chosen not to maximize the exploration and development of oil resources in their own territory and offshore areas.?

It is clear that attempts at pursuing legal action against OPEC, while it sounds good, will do absolutely nothing to reduce the cost of high oil prices. Until further supplies are introduced into the market place or in the case of significant decrease in global demand, high oil prices will remain, independent of OPEC action.

Full post as published by Mike Conaway's Blog on June 25, 2008 (boomark / email).