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http://business.timesonline.co.uk/article/0,,9078-2334521,00.html
The Times August 30, 2006
BP under fire again as oil traders face scrutiny
By David Robertson
BP HAS been ordered by United States regulators to give evidence over possible insider trading in the world crude oil price.
The Commodity Futures Trading Commission (CFTC) is investigating whether BPs energy traders, who buy and sell oil, used inside information about the companys operations to profit from changes in the oil price.
This latest investigation comes as BP faces a series of damaging revelations that have brought it an uncomfortable amount of attention from US politicians and media. Some analysts believe that BP, the worlds second largest oil company, is being treated as a scapegoat by US politicians who are under fire from voters over high petrol prices.
The companys executives are being summoned before Congress next week to explain why pipeline problems have forced the shutdown of half the Prudhoe Bay oilfield in Alaska.
The American Petroleum Institute (API) also believes the industry is being unfairly criticised by politicians blaming big oil for voter displeasure. This is a particularly sensitive issue now as elections to the House of Representatives and Senate in November could shift power in Washington back to the Democrats.
Ray Connolly, a spokesman for API, said: The industry as a whole has received criticism for not doing enough about the oil price and energy independence.
Leo Drollas, chief economist at the Centre for Global Energy Studies, said: Obviously people are going to pick on the most noticeable, and BP has had a lot of bad news recently.
Not only is BP under fire from politicians, but federal and state authorities are also investigating its operations at Prudhoe Bay. Other challenges include a threat to make Lord Browne of Madingley, BPs chief executive, give evidence over a 2005 refinery explosion in Texas that killed 15 people. The company also faces a civil action initiated by the CFTC over alleged manipulation of propane gas prices as well as an investigation by the US Department of Justice into petrol trading during 2002.
The latest CFTC investigation is understood to be focusing on crude oil trades made by US-based BP staff in 2003 and 2004.
According to energy traders to whom The Times has spoken, it is quite common for the trading departments of major oil companies to act in the commodities market before certain operational information is made public. However, traders are expected only to cover the company for potential losses, not seek actively to profit from production disruptions or refinery shutdowns.
The CFTC, which refused to comment, is thought to be conducting an industry-wide investigation into energy trading, but it is BPs potential involvement that has grabbed attention because of the companys recent problems.
Dr Drollas said: They are going to be the whipping boys for a while, but the issues are wider. Politicians can whip up support by attacking Big Oil but it is not right that they are deflecting attention from their own shortcomings in dampening demand through taxation and allowing more drilling.
BP said it was co-operating with the authorities.
The Times August 30, 2006
BP under fire again as oil traders face scrutiny
By David Robertson
BP HAS been ordered by United States regulators to give evidence over possible insider trading in the world crude oil price.
The Commodity Futures Trading Commission (CFTC) is investigating whether BPs energy traders, who buy and sell oil, used inside information about the companys operations to profit from changes in the oil price.
This latest investigation comes as BP faces a series of damaging revelations that have brought it an uncomfortable amount of attention from US politicians and media. Some analysts believe that BP, the worlds second largest oil company, is being treated as a scapegoat by US politicians who are under fire from voters over high petrol prices.
The companys executives are being summoned before Congress next week to explain why pipeline problems have forced the shutdown of half the Prudhoe Bay oilfield in Alaska.
The American Petroleum Institute (API) also believes the industry is being unfairly criticised by politicians blaming big oil for voter displeasure. This is a particularly sensitive issue now as elections to the House of Representatives and Senate in November could shift power in Washington back to the Democrats.
Ray Connolly, a spokesman for API, said: The industry as a whole has received criticism for not doing enough about the oil price and energy independence.
Leo Drollas, chief economist at the Centre for Global Energy Studies, said: Obviously people are going to pick on the most noticeable, and BP has had a lot of bad news recently.
Not only is BP under fire from politicians, but federal and state authorities are also investigating its operations at Prudhoe Bay. Other challenges include a threat to make Lord Browne of Madingley, BPs chief executive, give evidence over a 2005 refinery explosion in Texas that killed 15 people. The company also faces a civil action initiated by the CFTC over alleged manipulation of propane gas prices as well as an investigation by the US Department of Justice into petrol trading during 2002.
The latest CFTC investigation is understood to be focusing on crude oil trades made by US-based BP staff in 2003 and 2004.
According to energy traders to whom The Times has spoken, it is quite common for the trading departments of major oil companies to act in the commodities market before certain operational information is made public. However, traders are expected only to cover the company for potential losses, not seek actively to profit from production disruptions or refinery shutdowns.
The CFTC, which refused to comment, is thought to be conducting an industry-wide investigation into energy trading, but it is BPs potential involvement that has grabbed attention because of the companys recent problems.
Dr Drollas said: They are going to be the whipping boys for a while, but the issues are wider. Politicians can whip up support by attacking Big Oil but it is not right that they are deflecting attention from their own shortcomings in dampening demand through taxation and allowing more drilling.
BP said it was co-operating with the authorities.
