Dec. 14, 2006
Possible Action Against BP for Gasoline Trading Violations Shows Need for Congressional Oversight of Oil Industry
Statement of Tyson Slocum, Director, Public Citizen’s Energy Program
Oil giant BP on Wednesday admitted in a filing to the Securities and Exchange Commission that U.S. Commodity Futures Trading Commission staff “notified BP on November 21, 2006 that they intend to recommend to the CFTC that a civil enforcement action be brought against BP … alleging violations … of the Commodity Exchange Act in connection with its trading of unleaded gasoline futures. … The U.S. Attorney for the Northern District of Illinois is also conducting an investigation into BP’s gasoline trading.” The announcement also confirmed that “the Commodity Futures Trading Commission is currently investigating various aspects of BP’s crude oil trading and storage activities in the US since 2003.”
This comes after the trading commission brought charges in June accusing BP of manipulating the nation’s propane market, resulting in jacked-up prices for consumers.
This corroborates what Public Citizen has said for years: uncompetitive oil and gas markets, caused by the recent wave of mergers, allow oil companies to manipulate supplies and gouge consumers. This shows that the run-up in prices over the past several years may be explained, in part, to Enron-style market manipulation by major oil companies. In congressional testimony and in reports such as “Hot Profits and Global Warming: How Oil Companies Hurt Consumers and the Environment,” Public Citizen has detailed the ways in which big oil companies pad their profits by engaging in anti-competitive practices. These abusive practices not only apparently violate the law but cause consumers to pay more at the pump than they should.
In light of this admission, Public Citizen urges Congress to:
Initiate a sweeping investigation, using subpoena power, of the trading, storage and transportation practices of the major oil companies operating in America. The current commission investigation of BP is too narrow, and Congress must examine whether such practices are widespread throughout the industry. Such an investigation must include Wall Street investment banks and hedge funds, which play an increasingly large role in oil and gas trading markets.
Re-regulate energy trading exchanges to restore transparency and impose firewalls to stop energy traders from speculating on information gleaned from the companies’ affiliates.
Strengthen anti-trust oversight over the oil industry, including revisiting whether recently approved mergers have made markets less competitive.