OPEC or NOPEC?
Once listed on Forbes’ Most Powerful People, the recent conviction of infamous drug lord Joaquin ‘El Chapo’ Guzmán is a significant moment in the USA’s war on cartels.
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Former kingpin of the Sinaloa cartel, El Chapo amassed a fortune of over US$14 billion from his underworld empire of cocaine, heroin and cannabis trafficking in an extensive fleet of trucks, trains, planes and submarines (pipelines stayed clean and transported solely crude and natural gas).
One of the most influential and dominant players in the supply of illegal drugs in the US, the Sinaloa cartel is a multi-billion dollar enterprise, footing the bill for El Chapo’s life of luxury. Known to possess weapons customised in bling – including a gold-plated AK-47 bearing his initials and a diamond-encrusted pistol – private jets and a rural ranch home to roaming lions and bears, are all a distant memory for El Chapo as he faces a future behind bars.
The notoriety of this drug baron is evident in the fact he was more infamous than Pablo Escobar, the Colombian drug lord and narcoterrorist of the Medellín cartel, with El Chapo selling more narcotics than Escobar did at the height of his career, according to the Drugs Enforcement Administration.
El Chapo’s murderous cartel thrived off political corruption and the greed of those in power. The crackdown on cartels by the US is not just focused on narcotics but also on oil, specifically the Organisation of the Petroleum Exporting Countries (OPEC). OPEC is considered by many as an organisation rooted in collusion, and thus is classed a cartel. Established in 1960, OPEC currently has 14 members who co-ordinate policies on the likes of oil prices and production quotas.
The US has been vocal in its aversion to OPEC for over 20 years. On 7 February, a US House of Representatives committee approved a bipartisan bill known as the No Oil Producing and Exporting Cartels Act, or NOPEC. If this legislation successfully passes in Congress (which it has not been able to achieve on multiple previous occasions), it will open up OPEC members to US lawsuits on grounds of collusion.1 According to US Senator Chuck Grassley – one of those who re-introduced the bill to the Senate – the US is “committed to reducing our reliance on foreign oil, especially when it’s artificially and illegally priced”.
OPEC members reportedly account for 44% of the world’s total oil production and 73% of global proven reserves, meanwhile the US has been a net energy importer since 1953.2 Reviving a bill to counter OPEC’s ‘price-fixing’ could rapidly aid the US’s goal to reduce reliance on foreign oil, because OPEC members could take retaliatory action and leave the US to rely solely on domestic production.
The EIA’s ‘Annual Energy Outlook’ has forecast US crude oil production to increase, driven mainly by Lower 48 onshore tight oil development, and for the country to become a net energy exporter in 2020, however return to an importer status again by 2030 as production declines.
The American Petroleum Institute (API) is one voice that has opposed the NOPEC legislation, on the basis that flourishing US energy output has scaled back OPEC’s reign. It is possible that a considerable rise in oil prices could drum up support in Congress for the bill, but the recent oil price rise (a three-month high) to US$66.37/bbl for Brent crude is arguably too minor to garner support.
From a cartel focused on the flow of liquid gold to one of violence and drug trafficking, the US’s stance on organised, formal collusion is evident: it is not welcome on their side of the border.
1. Competition Policy International, ‘US: House Panel Passes Bill Targeting OPEC’, 10 February 2019.
2. The Independent, ‘OPEC: What is the international oil cartel and why has Qatar left its ranks?’, 3 December 2018.