Petrol price fixing scandal: Call for oil giant bosses to be jailed if they’re found guilty

Jason Beattie, Graham Hiscott
15 May 2013
Mirror UK

The alleged price rigging has been going on since 2002, during which time petrol prices have risen by an astonishing 80%

The bosses of oil giants engulfed in a price fixing scandal could be jailed if they are found guilty, David Cameron warned today.

Mr Cameron said new legislation means the firms and their executives would face “major consequences” if they have ripped off drivers by fiddling wholesale oil prices.

His stern words follow raids on the London offices of BP and Shell – companies which have both raked in multibillion-pound profits this year – by investigators probing accusations of price rigging.

There are fears that millions of drivers have been paying well over the odds for petrol and diesel for a decade.
The investigators said if oil prices had been made artificially high it would have led to rocketing costs at the pumps.

The alleged price rigging has been going on since 2002.

Between then and now petrol prices have risen by an astonishing 80% to an average of 135p a litre.

It is not just motorists who would have been clobbered by the scandal.

The probe relates to a pricing process used by ­information specialist Platts.

Figures produced by the firm and other agencies are used as a guide for pricing a wide array of oil-related products.
So price rigging may have affected the cost of everything from gas to chemicals used to make plastic in products we all use.

Platts in London was also raided yesterday as part of the probe across the continent by the European Commission’s competition authorities.

The AA and the RAC today demanded to know the truth – as haulage firms said they would demand compensation if claims of price fixing were proved.

Speaking on a trip to New York, Mr Cameron said today the allegations were “very serious”.

He added: “It is hugely concerning and an investigation is under way.

“It’s totally unacceptable for firms to fix prices and force consumers to pay more.

“That’s why we are looking at how to extend this criminal offence to the energy sector to make sure those who manipulate benchmark prices feel the full force of the law.

“So let’s let the investigators do their work, but it’s very concerning.

“If this has been happening it is very, very serious and major consequences will follow.”

The raids came months after Britain’s Office of Fair Trading gave the oil giants a clean bill of health.

The watchdog, which investigated claims that lower costs were not passed on to drivers at the pump, said there was not enough evidence to look at whether wholesale prices were fixed.

But Mr Cameron today held back from criticising the watchdog.

Asked if it had been asleep on the job, he replied: “The OFT is involved in this investigation as I understand it but we have to get to the bottom of what happened first before I think we can pass judgment on the way regulators have worked in the UK.”

The investigators – who also raided Norwegian oil company Statoil – said several companies may have colluded in manipulating the price of oil and green “biofuels”.

This could have happened if oil companies provided false information to Platts.

The developments came as Tory MP Robert Halfon called for firms found guilty of price fixing to be hit with a windfall tax on profits – with the money given back to motorists.

Mr Halfon, who has led a crusade against rip-off petrol prices and previously claimed that companies were conspiring to set pump prices, accused the OFT of a “limp-wristed lettuce leaf” inquiry after Parliament had voted for a full probe.

The MP for Harlow, in Essex, said: “We need tough action from the Government on this and that means putting the oil price fixers in prison if they are found guilty.

“And it means huge financial penalties or even a windfall tax on those found responsible with the money given back to the motorists.”

The European Commission probe comes after one of Europe’s biggest energy trading groups, Total Oil Trading, warned about “inaccurate pricing” of crude and oil products.

Investigators have refused to give many details about the inquiry.

But today European Commission spokesman Antoine Colombani said: “Even small distortions of assessed prices may have a huge impact on the price of crude oil, refined oil products and bio-fuel purchases and sales, potentially harming final consumers.”

James Hookham, at the Freight Transport Association, said it would demand compensation if allegations of price fixing are found to be true.

He said: “Our members are surprised and shocked at these claims.

“They are altogether different from what was being talked about by the Office of Fair Trading.

“This is a serious, long term conspiracy to defraud.

“We would be hugely concerned that people have been ripped off and if these allegations are proven, if there was a successful prosecution, I am sure redress would be looked at. We would be looking for compensation.”

AA president Edmund King said: “Maybe, just maybe, this investigation will expose the truth. It’s about time.”

Pete Williams, RAC head of external affairs, said motorists would be “gutted” if the rigging claims were proven.
He added: “Learning that prices may have been artificially inflated is shocking, especially for many of the country’s motorists who are suffering fuel poverty.

“We recently estimated that 800,000 of the poorest car-owning households in the UK are spending more than a quarter of their disposable income on petrol and diesel.

“What’s more, we found the social lives of 54% of people are being negatively affected by the high price of fuel.
“One in 10 people told us they have stayed with friends near work, while some have even slept in their cars to save money.”

Shell said its companies are assisting the European Commission’s inquiry.

It added: “We are fully co-operating with the investigation. For legal reasons we cannot make any further comment at this stage.”

BP said: “BP is one of the companies that is subject to an inspection that was announced yesterday by the European Commission.

“We are co-operating fully with the inspection and are unable to comment further at this time.”

Shares in BP closed down 1p, or 0.2%, at 467.6p tonight while Shell had fallen 55p to 2300.5p or 2.3%.

Four months ago the Office of Fair Trading ruled out launching a full probe into allegations of petrol price fixing, insisting the sector was “working well”.

A spokesman said yesterday that the watchdog had received “no credible evidence” after it called for information about price fixing in January in its provisional report into the market.

Speaking in the Commons, Energy Secretary Ed Davey said: “The OFT is an independent body. It’s a strong body, it has powers, it made its investigation.

“It had a call for evidence, for information, and it is responding to that.”