II

106TH CONGRESS

2D SESSION S. 2182

To reduce, suspend, or terminate any assistance under the Foreign Assistance

Act of 1961 and the Arms Export Control Act to each country determined by the President to be engaged in oil price fixing to the detriment

of the United States economy, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 6, 2000

Mr. GRASSLEY introduced the following bill; which was read twice and referred

to the Committee on Foreign Relations

A BILL

To reduce, suspend, or terminate any assistance under the

Foreign Assistance Act of 1961 and the Arms Export

Control Act to each country determined by the President

to be engaged in oil price fixing to the detriment of

the United States economy, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 The Act may be cited as the ‘‘Oil Price Reduction

5 Act of 2000’’.

6 SEC. 2. FINDINGS.

7 The Congress finds the following:
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1 (1) Oil producing countries, including the na2 tions of the Organization of Petroleum Exporting

3 Countries (OPEC), took concerted actions in March

4 and September of 1999 to cut oil production and

5 hold back from the market 4,000,000 barrels a day

6 representing approximately six percent of the global

7 supply.

8 (2) OPEC, in its capacity as an oil cartel, has

9 been a critical factor in driving prices from approxi10 mately $11 a barrel in December 1998 to a high of

11 $30 a barrel in mid-February 2000, levels not seen

12 since the Persian Gulf Conflict.

13 (3) On February 10, 2000, a hearing before the

14 Committee on International Relations of the House

15 of Representatives on ‘‘OPEC and the Northeast

16 Energy Crisis’’ clearly demonstrated that OPEC’s

17 goal of reducing its oil stocks was the major reason

18 behind price increases in heating oil, gasoline, and

19 diesel oil stocks.

20 (4) During this hearing, the Assistant Secretary

21 in the Office of International Affairs of the Depart22 ment of Energy noted that artificial supply con23 straints placed on the market are ultimately self-de24 feating in so far as they increase volatility in the

25 market, lead to boom and bust cycles, and promote
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1 global instability, particularly in developing countries

2 whose economies are extremely vulnerable to sharp

3 price increases.

4 (5) These price increases have caused infla5 tionary shocks to the United States economy and

6 could threaten the global economic recovery now un7 derway in Europe and Asia where the demand of oil

8 is rising.

9 (6) The transportation infrastructure of the

10 United States is under stress and tens of thousands

11 of small- to medium-sized trucking firms throughout

12 the Northeast region are on the verge of bankruptcy

13 because of the rise in diesel oil prices to more than

14 $2 per gallon—a 43 percent increase in the Central

15 Atlantic region and a 55 percent increase in the

16 New England region—an increase that has had the

17 effect of requiring these trucking firms to use up to

18 20 percent of their operating budgets for the pur19 chase of diesel oil.

20 (7) Many elderly and retired Americans on

21 fixed incomes throughout the Northeast region of

22 the United States cannot afford to pay the pre23 vailing heating oil costs and all too often are faced

24 with the choice of paying the grocery bills or staying

25 warm.
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1 (8) Several key oil producing nations relied on

2 the United States military for their protection in

3 1990 and 1991, including during the Persian Gulf

4 Conflict, and these nations still depend on the

5 United States for their security.

6 (9) Many of these nations enjoy a close eco7 nomic and security relationship with the United

8 States which is a fundamental underpinning of glob9 al security and cooperation.

10 (10) A continuation of the present policies put

11 in place at a meeting of OPEC Ministers in March

12 and September of 1999 threatens the relationship

13 that many of the OPEC nations enjoy with the

14 United States.

15 SEC. 3. POLICY OF THE UNITED STATES.

16 (a) POLICY WITH RESPECT TO OIL EXPORTING

17 COUNTRIES.—It shall be the policy of the United States

18 that its political, economic, and security relations with

19 countries that are major net oil exporters will be deter20 mined to a great extent by whether such countries engage

21 in oil price fixing.

22 (b) POLICY WITH RESPECT TO OIL IMPORTING

23 COUNTRIES.—It shall be the policy of the United States

24 to work multilaterally with other countries that are major
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1 net oil importers to bring about the complete dismantle2 ment of international oil price fixing arrangements.

3 SEC. 4. REPORT TO CONGRESS.

4 Not later than 30 days after the date of enactment

5 of this Act, the President shall transmit to the Congress

6 a report that contains the following:

7 (1) A description of the overall economic and

8 security relationship between the United States and

9 each country that is a major net oil exporter, includ10 ing each country that is a member of OPEC.

11 (2) A description of the effect that coordination

12 among the countries described in paragraph (1) with

13 respect to oil production and pricing has had on the

14 United States economy and global energy supplies.

15 (3) Detailed information on any and all assist16 ance programs under the Foreign Assistance Act of

17 1961 and the Arms Export Control Act, including li18 censes for the export of defense articles and defense

19 services under section 38 of such Act, provided to

20 the countries described in paragraph (1).

21 (4) A determination made by the President in

22 accordance with section 5 for each country described

23 in paragraph (1).
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1 SEC. 5. DETERMINATIONS BY THE PRESIDENT OF MAJOR

2 OIL EXPORTING COUNTRIES ENGAGED IN

3 PRICE FIXING.

4 The report submitted pursuant to section 4 shall

5 include—

6 (1) the determination of the President with re7 spect to each country described in section 4(1) as to

8 whether or not, as of the date on which the Presi9 dent makes the determination, that country is en10 gaged in oil price fixing to the detriment of the

11 United States economy; and

12 (2) a memorandum of justification with respect

13 to each determination submitted in accordance with

14 paragraph (1), including in the case of any deter15 mination that a country described in section 4(1) is

16 not engaged in oil price fixing to the detriment of

17 the United States economy an explanation whether

18 that determination rests on a finding that the coun19 try is not engaged in oil price fixing, or a finding

20 that it is engaged in oil price fixing but that price

21 fixing is not detrimental to the United States econ22 omy.

23 SEC. 6. REDUCTION, SUSPENSION, OR TERMINATION OF

24 UNITED STATES ASSISTANCE.

25 Not later than 10 days after the date on which the

26 President transmits to the Congress the report pursuant
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1 to section 4, the President shall reduce, suspend, or termi2 nate assistance under the Foreign Assistance Act of 1961

3 and the Arms Export Control Act, including the license

4 for export of defense articles or defense services under sec5 tion 38 of such Act, to each country determined by the

6 President pursuant to section 5 to be engaged in oil price

7 fixing to the detriment of the United States economy.

8 SEC. 7. DIPLOMATIC EFFORTS.

9 (a) EFFORTS WITH RESPECT TO OIL EXPORTING

10 COUNTRIES.—It is the sense of the Congress that the

11 United States should continue to undertake a concerted

12 diplomatic campaign to convince all countries that are

13 major net oil exporters that the current oil price levels are

14 unsustainable and will negatively effect global economic

15 growth rates in oil consuming and developing countries.

16 (b) EFFORTS WITH RESPECT TO OIL IMPORTING

17 COUNTRIES.—It is the sense of Congress that the United

18 States should undertake a concerted diplomatic campaign

19 to convince other countries that are major net oil import20 ers to join in multilateral efforts to bring about the com21 plete dismantlement of international oil price fixing ar22 rangements.

23 (c) REPORT ON DIPLOMATIC EFFORTS.—Not later

24 than 90 days after the date of enactment of this Act, the

25 President shall transmit to the Congress a report describ-
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1 ing the United States diplomatic efforts undertaken in ac2 cordance with subsection (a) and (b), and the results

3 achieved by those efforts.

4 SEC. 7. DEFINITIONS.

5 In this Act:

6 (1) OIL PRICE FIXING.—The term ‘‘oil price

7 fixing’’ means participation in any agreement, ar8 rangement, or understanding with other countries

9 that are oil exporters to increase the price of oil or

10 natural gas by means of, inter alia, limiting oil or

11 gas production or establishing minimum prices for

12 oil or gas.

13 (2) OPEC.—The term ‘‘OPEC’’ means the Or14 ganization of Petroleum Exporting Countries.

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