News that EU competition authorities have raided some Oil companies and the offices of those companies that monitor and report the price of Oil is a dramatic development. At this stage, we simply don’t know where this will lead. At the very least, it clearly shows that the Oil market must be made more transparent so that we can be confident that it is working fairly. At worse, it raises the spectre that we have indeed all been ‘ripped off’ in spectacular style.
Earlier this year the UK Office of Fair Trading did an’ inquiry into whether we needed an inquiry’ in relation to the petrol/diesel market. We were extremely disappointed that based on their initial work, they decided not to carry out a full scale investigation. Our Quentin Willson also wrote to the UK Financial Services Agency asking them to look into ‘whistleblower’ claims that the Oil market was being manipulated. Again, we were disappointed by their response. At last, someone has appears to have acted decisively and we now have a real chance of getting to the truth.
Personal Comment from Quentin Willson
'News today that European investigators have raided oil company offices comes as no surprise to us. I wrote to the FSA last year asking for an enquiry into oil price manipulation and FairFuel had meetings with the OFT asking for the same thing. Neither official body thought an investigation would be appropriate. Yet we knew that the spikes in the price of oil last year couldn't possibly be due to supply and demand since the major global economies were in recession and everybody was consuming less oil and buying less fuel. We voiced our concerns and nobody listened.
The whole oil market needs much greater scrutiny. I've said before that its an opaque market without any real accountability and badly needs an official watchdog with teeth - empowered to levy draconian fines. But if these allegations are true and the European Commission do find robust evidence, this is a price fixing scandal that will make Libor look like overcharging in a sweet shop.
Its not just oil companies that will have been involved but banks, commodity houses, oil traders and stock brokers. For years the financial markets have been trading oil aggressively and pushing up prices across the globe. There have been financial institutions with more oil floating on the oceans in tankers than the oil majors. They wait for a hike in price (which may have been manipulated) and then sell for hundreds of million dollars of profit. Easy work.
And the actual cost to businesses and consumers over the last decade could, if these allegations are true, run into many billions of pounds and have actually accelerated the global financial meltdown of 2008. That I know is an apocalyptic statement but if you look at the numbers back then the price of crude rose to such levels that it destabilised the global supply chain and added huge extra costs to almost everything. The high price of oil has been a major factor in reducing global growth in the last five years and if it does turn out that prices have been artificially massaged then both the oil industry and its practitioners should be held to account. I want a full, root and branch investigating into the way oil prices are reported and a proper watchdog to make sure price fixing can't happen.
FairFuel and I don't want to sound smug, but we did warn the Government about this on numerous occasions and they did nothing."
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