Congressional Insanity: Sue OPEC over Oil Prices

In a veto proof margin, no doubt enhanced by election political pandering, the House passes bill to sue OPEC over oil prices.

The House of Representatives overwhelmingly approved legislation on Tuesday allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices, but the White House threatened to veto the measure.

The bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow.

The measure passed in a 324-84 vote, a big enough margin to override a presidential veto. The legislation also creates a Justice Department task force to aggressively investigate gasoline price gouging and energy market manipulation.

"This bill guarantees that oil prices will reflect supply and demand economic rules, instead of wildly speculative and perhaps illegal activities," said Democratic Rep. Steve Kagen of Wisconsin, who sponsored the legislation.

The lawmaker said Americans "are at the mercy" of OPEC for how much they pay for gasoline, which this week hit a record average of $3.79 a gallon.

The White House opposes the bill, saying that targeting OPEC investment in the United States as a source for damage awards "would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to U.S. refiners."

Bush Correct Again

Bush was correct in threatening to veto housing legislation, and this veto is clear cut as well. Ironically, after having nothing good to say about President Bush for nearly 8 years, I am now defending him in back to back issues.

Congressional Arrogance

The arrogance of Congress is amazing. Congress actually thinks it can pass legislation the rest of the world must follow. Imagine the outrage if China passed laws and told the US what to do! China, Saudi Arabia, Brazil, Iran, and five dozen other countries should all issue a joint statement.

It should read as follows:

If you are wondering why oil prices are high you should look into a mirror. You are blowing $trillions in Iraq, wasting countless billions on housing bailout plans, you have troops stationed all over the world, wasting energy at great expense.

The taxes you are collecting do not meet your expenses, on anything. Look at your latest farm bill, your tariffs on ethanol and your policies on grains, all of which are driving up prices. It's no wonder the the US dollar is falling.

Your president and treasury pay lip service to a "strong dollar policy" but the actions of Congress and your administration are doing everything they can to destroy the dollar.

Instead of trying to write laws for the rest of the world, please take care of your own business.

Instead, everyone tap dances around the issue, attempting to be as diplomatic as possible. Clearly diplomacy is not working. And it's no wonder that diplomacy is failing given that Congress is practically brain dead. A nice well deserved "Go To Hell" message just might wake Congress up. I doubt it actually, but it sure can't hurt.

Mish Oil Plan

• Eliminate ethanol subsidies (Brazil produces ethanol at 1/3 our cost but we will not allow ethanol imports)
  
• Eliminate crop subsidies
• Eliminate all tariffs and all subsidies
• Adopt a balance budget (This will strengthen the US dollar, dramatically)
  
• Get out of Iraq, Europe, Japan, and damn near everywhere else (This will ease geopolitical tensions and have Iraq pumping oil within 4-5 years or less)
  
• End US imperialism (This is very dollar supportive)
  
• Legalize hemp for fiber production and biofuels (This will reduce the need for petroleum based fibers, and hemp will be far better at producing biofuels than corn)
  
• Let the free market find a solution (If Congress would get the hell out of the way, the free market will find a practical solution)
  

Instead Congress wants to sue OPEC. In a way, suing OPEC is innocuous because it is a pointless waste of time and going nowhere. I talked about this idea recently in Congress Whistled Offsides. However, this is very frustrating to me because the answers are so easy.

I am all in favor of being able to tell OPEC where to go. But the plan has to start with free market principles, not US imperialism or Congress attempting to dictate laws for the rest of the world.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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