Petrol sharks drive up prices at pump
SPECULATORS and ‘ shady middle men’ are driving up petrol prices, a damning report reveals today.
As the scandal of alleged price-fixing by major oil companies deepens, the AA reveals how traders are hitting fuel prices – causing three steep rises this year alone and increasing the cost of filling up a family saloon by £5.
Few of the traders’ names – including Glencore, Cargill, Gunvor and Trafigura – are known to consumers outside the oil community, but their effect on Britain’s 33million motorists and the wider economy is profound.
They buy huge quantities of petroleum on the open market and store it until the price goes high enough to make them a handsome profit, at which point they sell.
Industry experts say motorists have been fleeced by an average of at least £2,000 each and probably much more over the past
‘Shine a bright light on the spivs’
decade because of the alleged price-fixing now under investigation. But watchdogs should also ‘ shine a bright light’ on the activities of speculators chasing ‘inflated short-term profit’, says the AA.
The row comes after European Commission investigators raided the London offices of oil companies Shell and BP on Tuesday as part of a price-fixing investigation.
The AA says a major international report highlights how the oil markets in Europe had been hijacked by middle- men whose actions increasingly determine the price paid at the pumps.
The International Energy Agency says: ‘Increased European reliance on trading houses and third-party suppliers may also leave a growing share of European supply in the hands of market participants with a different set of incentives than those of refiners.’
Tory MP Robert Halfon, who has called for an investigation into alleged market manipulation in the oil market for the past three years, said there must be a full inquiry.
The Daily Mail has chronicled the scandal over several years – highlighting in November 2009 how tankers full of oil were parked off the UK coast waiting until the price went up.
Now, says the AA, the middle men, or ‘third party suppliers’, have their own tanks to keep the fuel in storage until the price goes up, making the trade ‘less visible’.
AA spokesman Luke Bosdet said consumers needed to be assured that the ‘middle men’ were playing fair by the rules – but there was no way of knowing.
He added: ‘The EU and competition watchdogs should shine a bright light on the spivs, shady middle men and speculators driving up prices by operating in the shadows of oil giants like BP and Shell.
‘They are just the tip of the iceberg. There are a lot of companies operating in these markets of whom most British consumers have sim- ply never heard. They include Glencore, Cargill, Gunvor, and Trafigura. Their trades in unleaded, diesel and oil are reported daily in the markets. Their activities have a huge impact on the prices paid at the pumps. But who are they? What exactly do they do and how do they
‘This is perhaps a turning point’
do it? Consumers have a right to know.’
UK petrol consumption fell to a record low this year, with 69 per cent of AA members cutting back on car use or spending. ‘The warning signs couldn’t be any clearer,’ the association said.
The AA’s own fuel price report said: ‘ These investigations are a significant development, perhaps a turning point, in getting to the bottom of what drives the price of fuel on UK forecourts.’
Trafigura’s initial response to calls was ‘no comment’, but when given the full outline of the report, a spokesman said he would seek further clarification.
Cargill and Glencore did not want to comment.
THE Serious Fraud Office last night confirmed it was the ‘appropriate authority to investigate allegations of price-fixing’ and would make a decision on a full investigation within days. It follows calls from Mr Halfon for UK authorities to begin their own probe. He said: ‘We can’t depend on Europe to sort out allegations of oil fraud.’