The EU is not exactly the most popular institution currently in Britain, but it has demonstrated its mettle in taking on the Big Oil corporates when successive UK regulators have equally demonstrated their utter uselessness. In moves ominously reminiscent of the banks’ Libor rigging scandal, the EU’s leading anti-trust authority has raided the oil majors Shell, BP and the Norwegian Statoil to investigate the setting of oil prices, and the gas prices normally linked to them.
This proble into oil benchmarks, which acutely affects the cost of living in petrol prices and home heating, has also ensnared Platt’s, the world’s leading price-reporting agency, which the European Commission has also ordered to be raided. It is not as though this was a sudden discovery.
It has long been known that oil and gas prices were fixed, and several months ago one of Europe’s largest energy trading groups, Total Oil Trading SA, warned that crude and oil products were ‘inaccurately priced’. The whole issue has been high on the UK political agenda for months. So why was nothing done by UK regulators?
Their performance has been pathetic. Only 4 months ago the OFT undertook a cursory inquiry which found nothing amiss with the petrol companies. Ofgem has carried out innumerable investigations into the oil and gas markets which have got precisely nowhere.
The Serious Fraud Office has finally been jerked into action by the EU dawn raids into looking into whether to take action against those names by the EU which is examining trading which goes back 10 years. The Financial Conduct Authority has also been induced to give more attention to its own ‘review’ of the market situation. The negligence and soft-touch incompetence of all these bodies is deeply reprehensible.
So what should be done? Clearly governments should demand far greater oversight of oil price setting. The International Organisation of Securities Commissions (IOSCO) had the opportunity to push through a fundamental restructuring of oil benchmarks, but under intense industry pressure fluffed it a year ago in a report which simply offered minor tweaks to the system.
Radical reform is needed. At present Platts and other agencies collect bids, offers and details of completed transactionsfrom traders who provide them voluntarily. Oil companies should not be allowed to select which trades they are willing to disclose. There should be use of actual transaction data wherever possible and only resort to bid and offer quotes in exceptional circumstances.
Price-rigging should become a crime. Above all, the private market left to its own devices is too open to abuse: at least one publicly owned oil company and trader is needed to ensure that markets and prices are fairly transacted and not abused and certelised at the expense of the hard-hit suffering public.
Tax revenue on fuel is what interest me more we all know about the Oil Cartels.
Also I’d now like to have my say on whether we should be in or out of the EU, just to show people like Blair I do have a view and a vote…