Tory MP Robert Halfon claims petrol prices are "crushing Britain" and creating a poverty trap, as he demands an investigation of the "oil cartels" not just from the Office of Fair Trading - but from the Financial Services Authority as well.
Today in Parliament, MPs of all parties will respond to an explosive whistle-blower statement that has been handed to PetrolPromise.com, a website that I set up to campaign for cheaper petrol and diesel.
Over the last few weeks, PetrolPromise.com has published a dossier of evidence, including this statement. It proves that:
1) Petrol and diesel have never been more expensive, in real terms.
2) Oil companies are uncompetitive, and are NOT passing on cheaper fuel to motorists.
3) There is increasing evidence that dodgy speculators are rigging the market, and forcing up the international price of oil.
First, the cost of fuel. To the Chancellor’s credit he has
frozen fuel duty - not just for six months, or for 12 months, but for
two whole years. Despite this, fuel prices are still rising and DECC
said this summer that - in real terms - fuel has never been so
expensive. To be clear - I believe we need to cut taxes on fuel. But the
oil market makes up nearly half of the pump price. It must bear its
share of responsibility as well.
If you don’t believe me, listen to what Sir Terry Leahy of
Tesco said, in 2011, about the catastrophic slump in retail sales that
has hit Britain. He said:
I don't think people fully appreciated what an oil shock we've
had. Filling up the family car has gone up 70% in two years, causing
what was a steady recovery to go sideways.
Yes the Eurozone crisis is difficult, and so is the overhang
of debt - but it is expensive energy prices that are really hurting
people on low incomes, and crushing our economic recovery.
Second, the oil companies. DECC data - from their Quarterly
Energy Prices release - makes it clear there is now a three week delay
between a fall in oil prices, and a drop in petrol prices at the pump.
But even accounting for this delay, cheaper oil was not passed on to UK
motorists for most of the last two years. This is true of nine out of
the last 18 months. No market is perfect. But why are motorists always
the ones to lose out?
Third, there is the allegation of price-fixing. This
means that - even if oil companies were doing the right thing - that
hedge-funds and speculators are rigging the price of oil, to keep it
Many academics and financial journalists have said this is
happening. For example, Rowena Mason has written an important piece in
the Telegraph, about how oil price “benchmarks” are unregulated, and -
like LIBOR - are vulnerable to manipulation. The Consumer Federation of
America has raised the same concerns, as has Deutsche Bank, professors
at MIT, Maryland University, and the LSE. Bloomberg and the Sun have
written about how banks are buying up strategic stocks of oil, and
hoarding them on ships at sea, or in underground silos. Finally, a
whistle-blower who trades the oil futures market has contacted PetrolPromise.com, and given us a detailed statement about how the market is rigged.
"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. 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
He goes on to say:
One part of the problem is a lack of market transparency. In
the oil futures market, huge volumes are offered and then withdrawn
without trading. There is no reason for this behaviour other than to
distort market prices - and unlike stocks and shares where large
holdings have to be declared, in the oil market nobody knows where the
money is coming from. Prices are particularly manipulated at the close
of business, when "markers" are set on an average of trades in the last
three minutes of the trading session. Every day, around these times, I
see that the structure of the market is being moved to bring prices in
line with the trading books of whoever is manipulating the market. This
is in order to fix the price and make sure a profit is shown on their
This is why today in Parliament, I will ask for an
investigation not just by the Office of Fair Trading, but by the
Financial Services Authority as well.Some of this debate is technical -
but we should not forget that petrol prices are not just about money.
They are an issue of social justice. Petrol prices are crushing Britain,
and they are creating a poverty trap. There is evidence from the LSE
that they are adding to Britain’s dole-queues. The AA says that low
income families now spend more on filling up the family car, than on
food. The ONS say that fuel prices are regressive - that they hit the
poorest Brits the hardest. RAC figures show that an ordinary worker in
Harlow is paying a TENTH of their income just filling up the family car -
in essence that they are facing petrol poverty. In my constituency of
Harlow, the question is not can you afford to drive; but can you afford
Germany and Austria are cracking down on the oil cartels,
America is taking action against rogue traders and banks - why can’t we
do this here in Britain, too?
Robert Halfon is MP for Harlow. He tweets at @halfon4harlowMP
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