Tuesday, May 14, 2013

Apart from House Prices, what isn't rigged these days?

Guardian: BP and Shell raided in oil price-rigging investigation

"European commission carries out 'unannounced inspections' to investigate claims oil companies colluded to manipulate prices". "Lord Oakeshott, former Liberal Democrat Treasury spokesman, said the alleged rigging of oil prices was "as serious as rigging Libor" – which led to banks being fined hundreds of millions of pounds". Guys, they are just TOO BIG TO PROSECUTE. Maybe fine them a couple of million Euros and move on, it's only the punters that are suffering.

Posted by alan @ 10:45 PM (1591 views)
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1. drewster said...

Naff all relevance to HPC, but since I know a thing or two about the oil & gas market....

If it's true, then yes it's as serious as rigging Libor. In the Libor scandal, rates were alleged to have deviated 7.5 basis points from the average around the start of the month. A typical floating-rate mortgage might have seen rates of 5.075% instead of 5%. For an ordinary consumer with a £200,000 mortgage that's £9 a month extra. It's not much individually, but multiplied across the homeowning population it's over £1bn a year.

With Libor, players could make money either by over-estimating or under-estimating, depending on whether they were long or short. By contrast in the oil market the producers (BP, Shell, Statoil, etc.) only want to manipulate prices upwards. This is hard to do consistently, so I'm not sure how by much they could have manipulated the market. Let's assume a 1% nudge. If Shell produces 4m barrels a day at $100 each, and they manipulate the price up to $101, then that's a nice profit of nearly $1.5bn a year, or £1bn.

Over the last few years there has been a considerable gap between the US West Texas Intermediate measure of oil price and the UK's Brent Crude price. There are some good reasons for this; but equally it could be a symptom of price manipulation.

Incidentally, UKIP voters:
"The European commission said its officers carried out "unannounced inspections" at several oil companies in London, the Netherlands and Norway to investigate claims ..."
Note that Norway isn't part of the EU, yet they still got raided. Seems like life outside Europe isn't that different....

Wednesday, May 15, 2013 12:02AM Report Comment

2. nickb said...

Given the various nefarious dealings of these companies (remember Ken Sarowiwa? The devestation of Ogoni lands in Nigeria? the devastation of the Gulf of Mexico? er, climate change?) I'd have thought this is towards the lower end of their misdemeanours. String them up.

Wednesday, May 15, 2013 10:15AM Report Comment

3. mark said...

I see those scandinavian countries are booming :)

actually if people paid less for oil and gas we would have more cash, so in a way it does effect house prices

Wednesday, May 15, 2013 10:47AM Report Comment

4. Striebs said...

Nickb ,

You drive a car ? Heat your house with gas ? Consume electricity ?

If so you are partly responsible for the Makondo incident like the rest of us .

As for anthropogenic climate change it's unproven .

Sorry but I think it's a bit childish to start vilifying oil companies for providing one of the essentials for modern life without which many people would perish .

The model of communal ownership of mineral rights (pretty well everywhere outside the US) should sit pretty well with people (like me) who want to extend it to communal ownership of surface rights with exclusive use available for a fee .

Wednesday, May 15, 2013 06:37PM Report Comment

5. libertas said...

They just want their piece of the pie. Maybe out of this negotiation we get a Pan European tax on energy?

Just another government sponsored protection racket. Meanwhile, it is the central banks who's inflation has lifted oil prices and then 50% of the cost is slapped on by taxation. In the UK, if we got rid of gas duty, and just had VAT, we would be paying probably 80p/liter and the economy would be booming. We may even be lucky enough to get some global warming, though I do wonder, if this cooling phase continues, will they begin mandating and subsidising 4x4s and taxing bicycles? We sure do need some warm weather.

Wednesday, May 15, 2013 11:59PM Report Comment

6. nickb said...

Of course I use fossil fuels, there is no escaping them. (I don't drive a car and don't fly any more however). That doesn't alter the fact that they cause climate change. If you want "facts", i would refer to the evidence - that means published research. It's actually no exaggeration to say that all of it supports anthropogenic climate change. So say every scientific body and just about every professional association. The dissenting voices are from the oil industry. We've been there before with tobacco.
But you seem to get your facts from a different source - where?
The fossil companies are a large part of the problem because they fund denial - a message you appear to have swallowed wholesale - and therefore make the problems a whole lot worse.

Thursday, May 16, 2013 01:31PM Report Comment

7. Striebs said...

Nickb ,

I'm glad you mention their is no escaping fossil fuels .

Renewables can contribute but are not and may never be an alternative to fuel based solutions and it seems nobody wants new nuclear .

The only alternatives appear to be population reduction or a change in lifestyle .

My contention is the green movements and the political elites want population reduction - not engineering solutions like better insulation , lighter materials for lighter cars , hydraulic fracturing , underground coal gasification or fusion .

We could well see a Chinese style enforcement of one-child policies and there will be plenty of people who have totally bought into the anti-scientific marxist movement ready to help them .

"It's actually no exaggeration to say that all of it supports anthropogenic climate change." your sentence would be wrong even if you had included "almost" .
Published research is NOT evidence . They are completely different things and should not be confused inside or outside a court of law .

A "fact" is something which is proven , not something over which there is a consensus .

When AGW hypothesis and empirical evidence contradict each other , as they do , I tend to question the hypothesis . If AGW does prove to be real then it will be by no means certain that it is due to the trace gas CO2 .
CO2 is just a too politically convenient way for the elites to control the masses . Why not soot from heavy fuel oil marine engines seeding water droplets .

Friday, May 17, 2013 11:35AM Report Comment

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