How oil companies could be inflating petrol prices

Conservative backbencher (and thank goodness he remains on the backbench, where he seems to wield an impressive level of influence) Robert Halfon has continued digging away at fuel prices over the summer, and this morning he has another victory to report. The Office of Fair Trading has agreed to examine whether it should investigate oil companies for price-fixing and market manipulation.

Halfon has spent the summer compiling a hefty dossier which he says shows how oil companies are charging motorists more than they should. You can read the full document here, but it says there is a three week delay between a fall in oil prices and a drop in petrol prices at the pump, and that cheaper oil was not passed to UK motorists in full for most of 2011 and 2012 even when this delay was taken into account.

It also includes a statement from a whistleblower, who approached Halfon’s Petrol Promise campaign to allege that prices are being kept artificially high in the oil market. His allegations (on p9 of the dossier) are worth a read in full. The key line is this:

‘I trade the oil market on a daily basis and every day the price is manipulated – not just the daily benchmark price but the calendar spreads that make up a large part of the daily volume. All through July, for example, there has been a massive buying-pressure on oil futures for August and September 2012. Both were trading at around a $0.5c to $1 dollar premium. This gives a false impression of the market and inflates the price of the nearby oil price, making prices higher on retail markets so pushing up the price of petrol at the pumps.’

Halfon is presenting the dossier to parliament next week in a half-day debate in the chamber which calls for a formal investigation by the OFT. It forms the next stage in his campaign on fuel prices after the government froze fuel duty. This is a key area of concern for MPs across the country – not just those who represent voters in the commuter belt and are worried about their constituents’ train fares. Expect a big attendance.