07:27 Wednesday 15th May 2013
Bigger Breakfast Show
BBC Radio Cambridgeshire
PAUL STAINTON: Have we been ripped off for years by rigged oil prices? I can hear the reply now Adam Kirtley, coming right across Cambridgeshire.
ADAM KIRTLEY: Yes!
PAUL STAINTON: We may have though. The European Commission are now investigating, aren’t they?
ADAM KIRTLEY: Yes they are. And there’s been a long rumour hasn’t there that there’s something fisjy about oil prices. Why are they so high. It’s not actually supply and demand. It’s the wholesale market. It’s the oil companies themselves, ensuring that it’s high by fixing the price. And finally the European Commission has thought right, we’d better go in and investigate it. So yesterday it literally raided the offices of BP, of Shell, StatOil which is the Norwegian company, and also a company called Platts, which isn’t an oil company, but Platts is actually a price comparison site, if you like, in the wholesale market. So it goes and spots, looks at, spot checks if you like the prices the various oil companies and people are quoting. Then it passes those on to oil traders, who then get a vague idea of what the prices should be.
PAUL STAINTON: Right. So the accusation would be perhaps that the oil companies all decide on a price. They go to those oil companies and they see what the price is and then they pass that on.
ADAM KIRTLEY: Yes. And they don’t do their checks and balances properly. The accusation against Platts is were you … your job is meant to be on behalf of the marketeers if you like. Do you go and check that that price that Shell was quoting was accurate? Did you check it, how they’d arrived at that price? Were they talking to other oil companies? Because the accusation is, put simply then Paul, is that BP phone Shell and say .. a bit like Virgin and BA fixing freight prices a while ago you may remember, or the banks fixing the LIBOR rate. It’s very similar. They collude. They also exclude other people who aren’t in the family if you like, of quoting their prices. So you get the smaller oil companies that have been excluded from what Platts would be investigating. And they may be charging a lower price. So it’s all a bit of a fiddle, is the accusation.
PAUL STAINTON: So just quickly then, the possibility is that what? If this is proven, prices could go down, and maybe get some compensation? Because the allegation is it’s been going on for years.
ADAM KIRTLEY: Don’t get too excited Paul.
PAUL STAINTON: Sorry.
ADAM KIRTLEY: No only because there’s no time limit to this investigation, so it could drag on and wither on the vine. But, if they’re found to be in an anti-EU Trust rule, they will be fined. They could be sanctioned. They could be arrested. And certainly, it would be exposed, and that would mean fairer pricing. But oil is .. Dallas wasn’t far off it with the power of JR. It’s controlled by some very very powerful people.
PAUL STAINTON: Big men in big hats.
ADAM KIRTLEY: Big men in big hats.
PAUL STAINTON: Thank you Adam. Adam Kirtley in a small hat.