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Oil Cartels and Venezuela -- A Moment of Truth for the Obama Justice Department

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This post is not about the merits of fossil fuels, fully cognizant of the growing existential danger they present to the environment and planet, but rather about the price of fossil fuels and our government's decades long complicit policies in the transfer of literally trillions of dollars of the nation's wealth to oil interests and despots around the world. Trillions that have helped to destabilize today's world, lubricating the clash of civilizations, making it possible for the billions upon billions to be expended by Mideast oil producers to radicalize generations of the young and vulnerable throughout all corners of the globe, to the ethos of jihad and intolerance.

The issue is highlighted in a remarkable and eye opening court battle currently being litigated:

United States District Court for the Southern District of Texas (No. 06-3569)
Spectrum Stores Inc,...et al Plaintiffs -Appellants
v.
CITGO Petroleum Corporation; Petroleos De Venezuela S.A... et al


In essence the case charges that CITGO Petroleum Corporation -- an American refining company with refineries in Lake Charles La., Corpus Christi, Tex, and Lemont, Ill. that supplies more than 13,500 domestic gasoline stations and is wholly owned by the Venezuelan State oil company, Petroleos de Venezuela S.A. -- is "liable under the Sherman Act for its participation in a global price-fixing conspiracy with the OPEC member nations and other private oil companies."

The essence of the charge against CITGO, and I quote from the complaint as filed:

If the member nations of the Organization of Petroleum Exporting Countries ("OPEC") were American companies, their participation in an open price fixing conspiracy would be illegal under the Sherman Act. The member nations might take comfort in the special protections afforded sovereign nations but private, especially American companies cannot. This case seeks to hold CITGO Petroleum Corporation, an American refining company wholly but indirectly owned by Venezuela, liable under the Sherman Act for its participation in a global price fixing conspiracy with OPEC member nations and private companies.


The brief goes on to comment:

The conspiracy's avowed purpose and direct, substantial and foreseeable effect is extraterritorial; increasing the price of oil and Related Petroleum Products (RPPs) globally, including the United States, which is a key target of the conspiracy...CITGO and OPEC have had common high ranking officials. CITGO officers prepared OPEC's Long-Term Strategy and organized OPEC summits and conferences; provided technical services and information on the U.S. market.


In essence, the complaint alleges that CITGO conspired with OPEC and is therefore liable as a principal and materially assists the cartel in achieving those aims.

But here is the rub of the matter. Given the issue of 'Sovereign Immunity' as it attains to this proceeding the court has asked the Obama administration to file a brief commenting on the merits of the complaint. In early July the Department of Justice is scheduled present the court with their amicus brief setting forth the administration's position.

Amazingly, perhaps even inadvertently in that it is a clarion wake up call to our government, CITGO having wrapped itself in the cloak of Sovereign Immunity, has made our government's actions the cornerstone of its defense. In CITGO's court filings, incorporating a chronology of the International Oil Policy of the United States which in turn "summarized that over thirty years of public policy statements made by members of (former Presidential Administrations), all reflecting a commitment to cooperation instead of confrontation with foreign sovereign oil-producers."

And therein lies a profound and hidden truth. A truth stemming from a fateful pilgrimage by then Vice President George H.W. Bush in 1986 to then King Fahd's throne in Saudi Arabia to rescue America's domestic oil industry reeling from oil prices veering toward single digits. Bush pleaded for a then moribund OPEC to be resuscitated in order to ratchet up oil prices. With the implicit backing of the American government, King Fahd's Saudi Arabia was quick and eager to comply. Within a year prices near doubled and the rest is history. Thus by giving OPEC a reprieve, Bush and the benign, better said insidious neglect and complicity of subsequent American administrations over the decades, helped saddle world consumers, rich and poor countries alike, transferring literally trillions into the coffers of the OPEC producers and their Big Oil cronies. In the guise of protecting the American oil industry, and likely because of its influence, the United States became OPEC's guardian. With the American government being acquiescent, OPEC oil producers had little to fear politically.

An example of our government's cartel embracing policies one need look no further than George W. Bush's -- it runs in the family- scuttling through threat of veto the proposed NOPEC Bill (NOPEC Act, S.879, 110th Cong (2007) that would have readily passed in Congress -- of which then Senator Hillary Clinton was a co-sponsor and then Senator Obama voted to support), legislation that would have lifted sovereign immunity in American courts for all OPEC related entities, permitting action by the Federal Trade Commission and the Department of Justice under the Sherman Act before the American Bar of Justice.

Brazenly, CITGO in its reply to the charges, permitted itself to instruct the court and anyone else interested, in the following civics lesson: according to CITGO, "The United States government has never pursued anti-trust sanctions against any oil producing sovereign...It has instead consistently opted for cooperation and constructive diplomacy with oil producing nations as reflected in numerous public policy statements made by members of the Executive Branch over decades."

Well there you have it, a clear statement of our government's abject alliance with the machinations of the OPEC cartel. The brief being prepared by the Department of Justice will resonate far and wide. It will be a tell-tale act of further collusion by our government in a trillion dollar decades long extortion visited on us and the rest of the world by OPEC and its allies. Or it will be a comprehensive break with past policies whereby our courts and our government are once again on the side of the American people and not the oil nabobs.

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