Oil companies in price fixing scandalMPs and motorists alike have long thought that the price UK drivers pay for petrol on the country's forecourts is too high. Many industry observers pointed out that while prices rose the instant the cost of crude went up, they were slow to fall when the crude market dipped.
MPs and motorists alike have long thought that the price UK drivers pay for petrol on the country's forecourts is too high. Many industry observers pointed out that while prices rose the instant the cost of crude went up, they were slow to fall when the crude market dipped. A government report earlier in the year found no sign of irregularities in fuel pricing but now the issue has resurfaced after officials raided the offices of both BP and Shell to look for evidence of price fixing. The companies are suspected of distorting the price of oil for more than a decade, stretching back to 2002.
In this period, petrol prices have increased substantially. The price for a litre of petrol is now £1.35, which is up more than 80% on 2002 figures. The European investigators who raided the London HQs of both Shell and BP, have said that the alleged price fixing could have resulted in a massive hike in the price of oil, substantially increasing the price of fuel for UK motorists. MPs have added that it looks like these drivers could have been "taken for a very expensive ride" over the years if the allegations prove to be correct.
The probe into price fixing in the oil market has echoes of the Libor scandal in the banking industry where banks were found to have falsely reported interest rates used in the calculation of UK mortgages. The UK banks involved were fined hundreds of millions of pounds. The MP for Harlow in southeast England, Robert Halfon, has been a long time critic of the oil companies and has campaigned for an investigation into their conduct in the oil market. He said: "fuel prices have been "crushing families across Britain." He went on to call for an urgent enquiry.
The UK raids were part of a wider investigation by EU competition authorities. Norwegian oil company Statoil and price reporting agency Platts were also raided. The investigation centres on fears that oil companies are colluding to provide false information to Platts, who report prices to the wider market. EU officials said: "Any such behaviour, if established, may amount to violations of European antitrust rules that prohibit cartels and restrictive business practices and abuses of a dominant market position. Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and bio-fuels purchases and sales, potentially harming final consumers."
Officials stressed that the raids were a preliminary step in the ongoing investigation and that no guilt of anti-competitive behaviour had yet been established.
Posted by Edwin Miles on