Crude Oil Speculation: The 2007 U.S. Congress Hearing and the ‘NOPEC’ Legislation I

Published on

January 30, 2019


Article by

Omar Chique

After the April 2018 spike in gasoline prices, the No Oil Producing Exporting Cartels (“NOPEC”) Act has become prominent again. The act attempts ‘to hold OPEC member states liable for violations of U.S. antitrust legislation for what are seen as anticompetitive attempts to limit the world’s supply of petroleum’ (Verrastro and Pumphrey, 2011). The Act has been presented to the consideration of the U.S. Senate multiple times since 1999.

The graph above (source: DOE) shows the U.S. gasoline prices in the 2012-2019 period. It can be seen that the alleged spike did not take gasoline prices to peak values in the period, though it happened under a different administration. This time, President Donald Trump lashed out at OPEC for not helping to reduce such ‘high gas prices.’ He also reminded OPEC that the U.S. protects some of its members for a very little amount of USD. However, in connection to these apparent high gas prices, we trace the discussion back to the 2007 U.S. Congress hearing on speculation in the crude oil market. Our aim is to analyze whether the speculation assertions are clearly substantiated to support the claims. Clearly, the hearing (Lieberman, 2007) was conducted to assess why U.S. oil prices were rising despite what appeared to be an adequate U.S. supply of oil.

Senator Levin introduced the problem: ‘Just about a year ago, on January 18, 2007, the price of crude oil on the New York Mercantile Exchange (NYMEX) was about $50 per barrel. A few weeks ago, the NYMEX price reached an all-time high of just over $99 per barrel.’

He then went straight to amaze the audience with the following statement: ‘And although the price of oil virtually doubled during this period, an unprecedented rise of nearly $50 in just 1 year, the overall inventory of oil in the United States has been above the 5-year average for the entire year. It just defies the laws of supply and demand to have an astronomical increase in the price of oil at the same time the U.S. inventory of oil has stayed above average.’

We now turn to analyze the stocks evidence. The graph below (source: DOE) indicates that crude oil and petroleum products stocks (excluding the Strategic Petroleum Reserve) were relatively stable between 2006 and 2007.

Also, contrary to the suggested ‘evidence’, a decline is observed in total crude oil and products business stocks from 2007 on. A decline in crude oil business stocks is also observed from July 2007 on. The decline in stocks actually suggests that higher prices ‘might’ be expected. We will continue analyzing this alleged speculation situation in the next article.


Verrastro, F., and Pumphrey, D. 2011, “NOPEC” Legislation and U.S. Energy Security, CSIS Center for Strategic & U.S. Energy Security, downloaded from | Link

Lieberman, J. 2007, Joint Hearing on Speculation in the Oil Market, U.S. Senate, downloaded from | Link

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