Last Tuesday, Congress passed NOPEC (No Oil Producing Export Cartel Act) — a useless bill intended to counteract OPEC's influence on gas prices. Michigan Democrat John Conyers has been a key supporter of the bill outlawing cartels operated by foreign nations:
"We don't have to stand by and watch OPEC dictate the price of our gas," Conyers said. "We can do something about ... this anti-competitive, anti-consumer behavior. And we are."
Although President Bush has announced that he will veto this useless piece of legislation if it reaches his desk, I find myself wondering just how, exactly, Conyers and the other 344 representatives who supported NOPEC believe the U.S. government would enforce the legislation if it were signed into law? Do they believe that the Saudis, the Iranians and Hugo Chavez will simply roll over and reduce prices if they are sued by the US attorney general?
Besides the problem of enforcement, congressional representatives who favor NOPEC overlook one of the essential functions of price. Price conveys information about supply to the both the consumer and to the potential producer of competitive alternatives.
In the case of oil, for better or for worse, OPEC's influence on pump prices reflects the fact that much of the world's oil supply is under the control of volatile states run by corrupt, semi-hinged autocrats. To the extent that pump prices rise due to the influence of OPEC, consumers adjust consumption downward whether they know about the politics of oil producing nations or not.
Conyers would have American consumers behave, instead, as if there is no reason to adjust consumption to reflect the fact that much of the world's oil supply is under the control of backward governments in unstable societies populated by people hostile to the United States. Or, perhaps Conyers would merely make-a-wish that American consumers would adjust their consumption downward instead of being motivated to do so by higher prices that actually reflect the elements of corruption and instability that drive oil prices up. And, if NOPEC could do what Conyers claims it could do, suppressing oil prices would also discourage competitive alternatives on the supply side of the equation.
It seems to me we want to be less dependent, not more, on unstable oil states run by corrupt despots. But if NOPEC could be enforced, it would encourage increased dependence those governments for our oil supplies. If I didn't know better, I would say that Conyers and the other 344 congressional reps who voted for this bill want to protect the long-term interests of despots and terrorists dependent on oil money from the United States.
Of course, this entire discussion is rendered moot by one demonstrably obvious fact. If the US government could have simply outlawed OPEC to end that cartel's influence on energy prices, it would have done so years ago.