[dorlomin]

http://www.guardian.co.uk/business/2013 ... ce-rigging

The London offices of BP and Shell have been raided by European regulators investigating allegations they have "colluded" to rig oil prices for more than a decade.

The European commission said its officers carried out "unannounced inspections" at several oil companies in London, the Netherlands and Norway to investigate claims they may have "colluded in reporting distorted prices to a price reporting agency (PRA) to manipulate the published prices for a number of oil and biofuel products".

The commission said the alleged price collusion, which may have been going on since 2002, could have had a "huge impact" on the price of petrol at the pumps "potentially harming final consumers".

Lord Oakeshott, former Liberal Democrat Treasury spokesman, said the alleged rigging of oil prices was "as serious as rigging Libor" – which led to banks being fined hundreds of millions of pounds.

He demanded to know why the UK authorities had not taken action earlier and said he would ask questions of the British regulator in Parliament. "Why have we had to wait for Brussels to find out if British oil giants are ripping off British consumers?" he said. "The price of energy ripples right through our economy and really matters to every business and families."

Just four months ago the Office of Fair Trading (OFT) ruled out an investigation into petrol price fixing after finding "very limited evidence" that pump prices rise quickly when the wholesale price goes up but fall more slowly when it drops.

[Plantagenet]

Its funny to see the EU worrying about high prices at the gas pump "possibly hurting consumers."

After all, it is the EU who has presided over the implementation of the highest gas taxes in world, resulting in the EU having the highest energy prices in the world. In most of the EU the gas taxes more than double the price of gasoline that consumers buy.

There is no mystery about it---- EU gas taxes DEFINITELY hurt EU consumers.

[dorlomin]

After all, it is the EU who has presided over the implementation of the highest gas taxes in world

The EU does not set fuel duty.

[Plantagenet]

If the EU is really concerned about high fuel costs hurting the consumer, why doesn't it work to reduce the >1 EURO of tax that consumers have to pay on each litre of fuel purchased in the EU instead of wasting time on the few pennies per liter that might be involved in this price fixing? The EU has the highest fuel taxes in the world---is that smart at a time when the EU economy is acting like its in a depression?

Do the math----the tax rate on fuel in the EU is over 100%---the taxes in the EU are higher than the cost of the fuel itself!!!

The very high taxes hurt EU consumers who buy fuel and they hurt the EU economy that is struggling to grow. If the EU can't figure out that high gas taxes hurt consumers---then no wonder their economy is a mess.

[dorlomin]

If the EU is really concerned about high fuel costs hurting the consumer, why doesn't it work to reduce the >1 EURO of tax that consumers have to pay

And this on a peak oil website.

[Plantagenet]

One result of peak oil is higher energy prices which in turn have a negative effect on consumers and the economy.

This is why the EU says its going after Shell and BP---they may've colluded and hurt consumers by increasing gas prices. But the major component of gas prices in EU countries isn't due to oil company collusion. Its not due to oil company profits, or stock dividends or even to the actual cost of the fuel. The biggest component of gas prices in the EU is the VAT and other taxes----the tax burden is the highest in the world in the EU and not so coincidentally the economy in the EU is performing more poorly than anywhere else in the world.

[davep]

You're missing the point. This is potentially massive industry collusion to rig oil prices.

[SeaGypsy]

Graeme put up an article about the $Billions being made as profit, which very simple maths showed amounted to roughly $7.00 a barrel. Ouch those greedy MF's! (More than likely the collusion is to try to keep prices down in order to destroy minor competition)

[Pops]

In a statement, the EC said: “The Commission has concerns that the companies may have colluded in reporting distorted prices to a Price Reporting Agency to manipulate the published prices for a number of oil and biofuel products.

...Statoil said the suspected violations “related to the Platts’ Market-On-Close (MOC) price assessment process”

http://www.telegraph.co.uk/finance/news ... ation.html

Here is a good article on the Platts MOC, read the whole thing

The investigation by the European Commission shines a light on how price reporting companies including Platts, the energy news and data provider owned by McGraw Hill Financial Inc., help determine the cost of raw materials used in everything from plastic bags to jet fuel. The suspected violations are related to the Platts’ Market-On-Close assessment process, or so-called window, and may have been ongoing since 2002, Statoil said.

“The industry has developed a high degree of reliance, you can almost call it dependence, on price reporting agencies,” said John Driscoll, the managing director of JTD Energy Services Pte., a Singapore-based energy advisory, and former trading manager at GS Caltex. “They have tremendous discretionary power in their ability to interpret and publish prices.”

Most oil is sold via contract not on exchanges. It's a negotiation that considers all the variables, adding for this and deducting for that but it needs a starting place, that's where Platts comes in, reporting what was paid recently, just like the spot markets do, wti, brent, dubai, etc.

[Tanada]

Graeme put up an article about the $Billions being made as profit, which very simple maths showed amounted to roughly $7.00 a barrel. Ouch those greedy MF's! (More than likely the collusion is to try to keep prices down in order to destroy minor competition)

90% of the world export oil supply is produced by National Oil Companies like Pemex in Mexico and Saudi Aramaco in the KSA. OPEC by definition is an organization designed to collude on setting oil prices.

Focusing on BP and Sell as the problem is like getting stabbed in a bar fight and worrying about getting blood on your old shirt instead of worrying about bleeding to death.

[Pops]

OPEC by definition is an organization designed to collude on setting oil prices.

Focusing on BP and Sell as the problem is like getting stabbed in a bar fight and worrying about getting blood on your old shirt instead of worrying about bleeding to death.

That was my first thought too, my second was how we are assured that oil companies are deathly afraid of regulators so would never "pump their stock" by padding reserves.

[dorlomin]

Focusing on BP and Sell as the problem is like getting stabbed in a bar fight and worrying about getting blood on your old shirt instead of worrying about bleeding to death.

They are publicly traded companies governed by the rule of law. This is a similar thing to the LIBOR and ISDAfix scandals. Its market rigging.

OPEC only sets production quotas, not price.

[Pops]

So limiting supply doesn't affect price?

[radon]

They have "colluded" for over a decade, but, all of a sudden, this has become known only now, what a coincidence.

QE no longer brings the fruit, the talk about finishing it has already been started, cautiously. What is going to happen to the US stock markets and their investors? Wait, there are all sorts of undeserving beneficiaries from the QEs - foreign currencies, commodities. All of a sudden, gold prices have plunged recently (or, more exactly, those of the paper contracts supposedly tied to the value of gold), investment currencies are going down, but oil is holding so far. Injustice to be fixed.

Looks like the Arab Spring: what a revelation was to suddenly find out that certain countries were ruled by naughty dictators for decades.

[ROCKMAN]

Still trying to absorb the details but it doesn’t look so much like they were ripping off consumers (at least not directly) but manipulating the market to the detriment of crude sellers and folks in the futures market. By making big last second trades and providing some calculus indicating a market move in one direction or the other they were impacting bids. I would think those players would be watching the investigation really close given it could lead to multibillion $ class action lawsuits.

[Pops]

I took it that they reported to Platts something different than what they actually sold. They report x bbl/ of oil sold for $101/bbl when the actual price was $100/bbl.

Then the next day, buyers and sellers looking at prices reported by Platts see $101 as the "market price" and that is where they start their negotiations or figure futures values, derivatives bets, etc.

If that is true they move the entire market.

[nocar]

About the taxes that EU-people pay on oil products - yes, the increased cost probably restrains consumption of petrol (a good thing in my book), but do not forget that the tax money does not disappear but is used for public services, and in this way goes back into the economy.

[nocar]

Gasmon, do you have any numbers concerning government income from petrol taxes and its total budget? And number of British pounds to foreign aid?