The US House of Representatives recently passed legislation that would let the government sue members of OPEC (the Organization of the Petroleum Exporting Countries) and other foreign states for colluding to restrict oil production in order to manipulate the price of oil.
A compelling idea for anyone experiencing sticker shock at the pump, especially given the widespread fear that we may see $5 gas by the fall.

Though suing OPEC is a pipe dream, and it may not help to lower gas and oil prices, a better way is to stop debasing the dollar (as oil is priced in dollars) and drastically expand its energy exploration and discovery on all fronts, including the outer continental shelf as well as renewable and alternative energy production.

Here's the thinking behind suing OPEC.

Some argue that we should sic the US tort bar sharks on this oil gang, that'll teach them to stop holding production in a blind crab-like fist. And maybe distracting the US tort bar will heave a sigh of relief through the corridors of beleaguered US corporations slapped silly for years by buckshot shareholder law suits.

The US tort bar could very well show Iran and Venezuela a thing or too, even Saudi Arabia, which largely refused President George W. Bush's recent pleas for increased production.

Saudi Arabia's King Abdullah has said he had ordered new oil discoveries left untapped to preserve oil wealth in the world's top exporter for future generations, so there, all you US drivers of gas guzzling Hummers and SUVs (even though sales of gas-hogging light trucks and SUVs at places like Ford have plunged).

"I keep no secret from you that when there were some new finds, I told them, ‘no, leave it in the ground, with grace from God, our children need it,'" the king reportedly said.

An antitrust action against OPEC is not some addlepated, knee-jerk, angry populist idea, in fact, there have been a number of attempts over the years to sue OPEC under American antitrust law. Just last year Congress voted to sue OPEC for engaging in a "price fixing conspiracy" that has "unfairly driven up the price" of crude oil and in turn gasoline. A suit would have yanked sovereign immunity that protects the governments in OPEC from prosecution or asset seizures.

And antitrust cops, here and abroad, have attacked all sorts of international cartels with heavy fines, be they in telecommunications, construction, banking, even in vitamins, or graphite electrodes, even elevator makers, glass makers and lysine, an animal feed additive.

At any given time there are some 50 grand juries investigating international cartels, with targets located on six continents and in nearly 25 countries, the American Bar Association says.

Prosecutors report that they have uncovered cartel meetings in more than 100 cities and 35 countries, including most of the Far East and in almost every country in Western Europe.

There's an argument to be made that an antitrust lawsuit against OPEC for once might compel the European antitrust police to grow a spine and go after the big guns, not just OPEC but Russia's price-fixing Gazprom too, not the small bore stuff like torturing Microsoft or General Electric.

But set aside for now that any such law won't pass a Bush veto.

Set aside too for now the fact that, if OPEC were found guilty of antitrust abuses in an American court, it would be extraordinarily difficulty trying to ascertain how the cartel would actually be punished or broken up.
Sovereign immunity, the act of state doctrine and other special international defenses typically preclude suits against OPEC and its member nations, analysts note.

Also there's a heated debate over whether or not the Middle East is really tapped out. Some Middle East officials say there's plenty of suppy; others privately say not so at all, as more capital investment is needed to pump all that there is out of aging oil fields and to rehabilitate geriatric refineries, notably in Iran.

Either way, supply and demand statistics out of the Middle East are poor, as secretive bureaucrats hoard data. And transparent data is non-existent notably in non OPEC countries like China and Russia.

Moreover, the higher oil prices soar, the less apt OPEC will pump, as oil in the ground is a more valuable asset than having its sovereign wealth funds investing in Citigroup or Merrill Lynch.

Eight members of OPEC are also members of the World Trade Organization, and a threatened new law allowing an antitrust suit could raise hackles at this worldwide body to get it to fight any such law. "The Venezuela-Iran-Ecuador axis might even cut production to spite the US, inflicting some pain on spot market prices," says Tom Post, a top editor at Forbes Magazine.

Perhaps the US could ask OPEC countries that are not WTO members, such Libya, Algeria, Iran and Iraq whether, as a condition of WTO membership, they'd stop orchestrating an international price-fixing conspiracy. But who is to say they will listen?

Congressman Michael Conaway (R-Tex.) agrees that suing OPEC is "foolhardy," he says, and "could have drastic consequences for the U.S. if the bill ever became law."

Why? Because foreign governments would quickly take "retaliatory action against American interests" such as "discouraging investment in the U.S. economy and [they] may even limit the availability of gasoline to the United States," Conaway says, adding that "if OPEC shifts away from pricing oil in dollars as a retaliatory action, the dollar's value on the world market would plummet and inflation would skyrocket."

Shifting away from pricing oil in dollars is already happening in Iran, OPEC's second-largest producer, which has stopped conducting oil transactions in U.S. dollars, due to tension over Tehran's nuclear program, the war in Iraq and a weakening US currency.

Since oil is priced in dollars on the world market, the dollar's erosion in value has caused crude prices to soar and in turn has eroded the value of the Middle East's dollar reserves.

The blogosphere in Saudi Arabia is hot with debate over inflation in Saudi Arabia and talk of pushing the royals to de-peg the riyahl from the US dollar."The dollar has totally been removed from Iran's oil transactions," Iran's oil ministry official Hojjatollah Ghanimifard has already said. "We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies."Iranian president Mahmoud Ahmadinejad called the depreciating dollar a "worthless piece of paper" at a summit last year in Saudi Arabia attended by state leaders from OPEC countries.

Iran has been pressuring other OPEC countries to price oil in a basket of currencies, but it has not succeeded as a number of members, including Saudi Arabia, are firm U.S. allies.

OPEC officials argue prices are beyond their control, with its secretary general blaming oil's rise on investment funds moving to oil from other markets and the weakness of the dollar."OPEC can't do anything about that," OPEC's secretary general said. "We can't stop people in the United States bringing their money to the oil market."

It's already been noted that the $600 fiscal stimulus checks already in the mail would have bought 190 gallons of gasoline instead of the 164 gallons now due to the weakening US dollar, and that if the dollar had maintained the same strength as the Euro, oil would be priced anywhere between $70 to $80 a barrel, not the $133 it is now.

Even so, it is an absurdity for OPEC to use as its official line, as it has done in prior antitrust lawsuits, that it is "a simple commercial entity."

More irritating is the stated market manipulation that OPEC blatantly says on its own website, in its FAQs section, by way of answering the question, "why does OPEC set oil production quotas?"

The OPEC website reads that its statutes require "OPEC to pursue stability and harmony in the petroleum market for the benefit of both oil producers and consumers...If demand grows, or some oil producers are producing less oil, OPEC can increase its oil production in order to prevent a sudden rise in prices. OPEC might also reduce its oil production in response to market conditions."

For the sake of argument, if a US law passes allowing an antitrust suit against OPEC, and the defendants are the members of the OPEC cartel, wouldn't you like to see who takes the witness stand? And wouldn't you like to see any court documents produced in discovery?