Oil executives should face jail if they conspired to keep petrol prices high by rigging the market, David Cameron warned last night.
The Prime Minister increased the pressure on BP and Shell by promising legislation to combat price rigging by oil firms. It would be modelled on legislation brought in after the Libor interest-rate fixing.
Following the European Commission's raid on the companies' offices over suspicions that they inflated oil and petrol prices for a decade, Mr Cameron said: “These are hugely concerning allegations and — if true — very, very serious.”
Mr Cameron, who was in New York on his final day of a United States tour, added that there would be “major consequences” if the claims proved to be accurate. The European Commission has said its “unannounced inspections” do not mean the companies are guilty and it is expected to take months to conclude the investigation.
But if allegations prove to be correct, oil-price rigging could have added more than £2,000 to the average household petrol bill over the past 10 years, Gustaf Duhs, of Stevens & Bolton, said.
Shell saw nearly £3bn wiped off its market value yesterday in the aftermath of Tuesday's raids on its offices in London and the Netherlands.
Seth Freedman, the man who blew the whistle on alleged price fixing in the gas market, said the practice was also common in the oil industry. “Traders have told me there is a widespread problem of attempting to manipulate prices right across the energy complex, in oil, gas, carbon and coal,” said Mr Freedman.
Ultimately, the price that people pay for oil, petrol and related products around the world is determined by a handful of “benchmarks”, of which the best known is Brent crude. So-called price-reporting agencies calculate the benchmark rate using data provided to them by oil companies, banks and hedge funds, which trade oil on a daily basis; the EC suspects these submissions are, in some cases, fraudulent.