Deputy prime minister backs European commission in its action against alleged oil market manipulation
Nick Clegg urged BP and Shell to fully co-operate with the European commission which is investigating them for alleged oil price manipulation, saying the issue was “incredibly serious”.
The deputy prime minister highlighted the fact that action was being taken by this particular regulator given the debate inside the coalition over Europe, but the government was also forced to explain why a British regulator had given the petrol market a clean bill of health barely four months ago.
“I’m pleased that the European commission is taking this as seriously as they are,” said Clegg standing in for David Cameron at prime minister’s question time in the House of Commons.
“I think it is very important on all of our behalves, and certainly on the behalves of all of our constituents for whom petrol and diesel and fuel prices are an incredibly important part of the weekly and monthly household budget, that those companies now engage seriously in looking at the allegations put to them by the European commission.”
BP, Shell and the oil price reporting agency, Platts, all had their London offices raided on Wednesday by competition competition investigators who are concerned about collusion and manipulation of oil and biofuel product markets.
Ed Davey, the energy secretary, said later that officials from the UK financial regulator, the FCA, were helping the Brussels authorities but he stressed that the investigation was not “directly linked” to the allegations of gas market manipulation first raised last November by the Guardian and which Ofgem and the Financial Conduct Authority are continuing to review.
The Office of Fair Trading (OFT) four months ago ruled out a full investigation into allegations of petrol price fixing after finding that competition in the sector was “working well” and there was “very limited evidence” that pump prices rise quickly when the wholesale price goes up but fall more slowly when it drops.
Davey said he had welcomed the OFT inquiry and understood that it had not not received any evidence that markets were being rigged but had urged anyone who did have information to come forward.
But Robert Halfon, MP for Harlow, urged a new UK inquiry saying manipulation could have a “huge impact” on the market and said he himself had evidence of problems.
“Last year we urged the Office of Fair Trading to launch a full inquiry into alleged price fixing by oil companies,” he told the BBC. “I had a whistleblower approach me with a dossier which we put up on our website called petrolpromise.com and sadly nothing was done.
“The Office of Fair Trading did a limp-wristed lettuce leaf-type inquiry and they should have had a full inquiry. Now we’ve left it up to the EU to take action.”
The oil market-fixing probe has made some experts see similarities with the Libor scandal, which saw the banks falsely report key interest rates used to calculate mortgages.