European officials are investigating BP, Shell and Statoil for fixing the price of oil. The US may do so as well.
[UK Energy officials] said manipulation of the oil price could have driven inflation and pointed out that the market is an important benchmark for many financial transactions.The economic impact of artificially inflated oil prices is huge; $20T worth of oil is priced from the Brent crude index, a focus of investigators. As with the LIBOR rate fixing scandal, it turns out the largest players "report" prices which are then aggregated and used as the benchmark for everyone else. What stops them from playing games with those reports? Nothing, except apparently the danger of being caught due to an excess of greed.
High oil prices also feeds through to bigger bills for food, clothes and other essentials because it pushes up the cost of transport and manufacturing.
A high oil price will also fuel inflation, which erodes the value of people’s savings, and can stifle economic growth, by pushing up businesses’ costs.
Whether the allegations prove true or not will doubtless take years of legal and other wrangling. Subsequent events will likely render the upshot moot. Many new oil outrages will vie for attention. And we'll all keep shelling out more money for energy.
What's undeniable is that the economy and every business and individual within it remains economically captive to the price of oil, and that price is established by some many factors and mechanisms vulnerable to abuse.
Whether by manipulation, speculation, or fundamental extrinsic event in the production of hydrocarbon energy, we need, as even BP once greenwashed, to get beyond petroleum.
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