BP and Shell have been raided by agents of the European Commission on suspicion of rigging oil prices for over a decade. Rigging petroleum prices could prove to be even more lucrative than rigging LIBOR.

The London offices of BP and Shell have been raided by European regulators investigating allegations they have “colluded” to rig oil prices for more than a decade.

The European commission said its officers carried out “unannounced inspections” at several oil companies in London, the Netherlands and Norway to investigate claims they may have “colluded in reporting distorted prices to a price reporting agency [PRA] to manipulate the published prices for a number of oil and biofuel products”.

The commission said the alleged price collusion, which may have been going on since 2002, could have had a “huge impact” on the price of petrol at the pumps “potentially harming final consumers”.

One can only wonder if these are isolated incidents in Europe or the tip of the iceberg for a global racket.

There has been deep unease since the Libor scandal that traded commodities such as oil and gas have become increasingly important as investments and yet many of the transactions are not going through exchanges where prices can be checked and transparency for investors assured.

The excuse given by the oil traders for not participating with PRA is that the PRA system is flawed and they might lose profits. Once again, banksters deciding what laws they will and will not follow.

While this is the beginning stage of any case that would ultimately be made against oil companies the implications are considerable. Any movements in the price of the global oil market, much like LIBOR, have a ripple effect that influences transactions all over the world. We are a petroleum civilization and if a select group of elites are manipulating the price of oil for their own benefit upwards the consequences are higher food and fuel prices – which can exasperate starvation and poverty in the developing world. This would not be the first time the oil market had been gamed.

Image by Ericosilva under Creative Commons license.