Will anti-OPEC legislation make a difference for anyone besides lawyers?
President Trump’s recent tweet urging OPEC to relax caused a sharp but brief drop in oil prices, not so much because traders thought that his tweet would change OPEC behavior but because they knew other traders would react to it. That’s the way the market works, for good or ill, but it’s not terribly relevant in the long run—meaning more than a day or so.
Aside from the legal question of whether foreign governments can be held legally accountable for actions taken overseas where they are not illegal, which I am dubious about but not qualified to comment on, both the hypocrisy and the effectiveness of the action need to be scrutinized. But cartels are actually quite commonplace around the world historically, even in modern times. Agreements to cut production equally during recessions so as to allow producers to ride out a temporary weak market have often been employed and with government approval if not insistence, in other countries, steel being a prominent example. Similarly, there have been many Commodity Price Stabilization Agreements aimed at supporting producers in the Third World.
Given that Perrier is now slightly more expensive than Brent crude, one presumes OPEC is proving less effective than the Texas Railroad Commission was in its heyday. Of course, the TRC had the Texas Rangers to enforce their orders , while OPEC has, well, economists and accountants. Not that economists can’t do a lot of damage.
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