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Manipulation Suspected in Highly Variable Gas Prices

Regulators from the European Union are nearly a month into their investigation of major companies including BP and Shell over suspicion of manipulating prices on an international index. CNBC reported on the initial launching of the investigation:

“Officials carried out unannounced inspections at the premises of several companies active in and providing services to the crude oil, refined oil products and biofuels sectors,” the commission said. The inspections took place in two European Union member states and one non-EU country, it said.

“The Commission has concerns that the companies may have colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products,” it said.

The commission also said companies may have prevented others from participating in the price-assessment process with the intent to distort published prices.

Allegations of large firms rigging prices are, of course, nothing new. Here in the US, a number of high ranking elected officials have introduced measures to protect American consumers from these kinds of abuses. In late May, ranking Energy Committee member Senator Wyden wrote to Attorney General Eric Holder to investigate corporations in the United States for similar offenses. According to The Hill:

Wyden said price fixing in commodity markets “has been an area of abuse within the U.S. in the past,” noting the Enron power market scandal.

“It is critically important to determine whether or not similar efforts have been made to manipulate U.S. oil indices by these firms or others,” he added.

“Efforts to manipulate the European oil indices, if proven, may have already impacted U.S. consumers and businesses, because of the interrelationships among world oil markets and hedging practices,” Wyden said.

Gas prices around the country remain highly variable. Americans should expect to remain at the whim of price shocks and larger trends for the forseeable future, and certainly through the summer driving season.

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