CRUDE OIL PRICE FIXING

SCANDAL
PRESENTED BY,

SADISHA V.M

SNEHA P.U

NEENU JOY

RAMAKRISHNA S.K

ROSEMOL T.T

SHAHANA K.S

ASMA.K.MUHAMMED
• Companies included: shell, BP, statoil&
Platts
• European commission conducted an inquiry to
find out the manipulation of published prices
of oil and bio fuel products.
 WHAT IS CRUDE OIL
• Crude oil is a naturally occurring, thick, dark brown
flammable liquid found in the upper strata of earth's
crust
• It is recovered mostly through oil drilling and is then
refined into a large number of consumer products like
petrol, kerosene, plastics and pharmaceuticals.
• It is a type of fossil fuel consisting of a complex
mixture of hydrocarbons
• Known as black gold as it of immense economic important
• Its greater demand than supply leading to high price rise
• Opec controls the pricing of oil all throughout the globe
• Causes inflation and affects the pricing of almost
everything
 ROYAL DUTCH SHELL

• Shell are a global group of energy and petrochemical

companies with an average of 93,000 employees in more
than 70 countries
• They use advanced technologies and take an innovative
approaches to help build a sustainable energy future
• It is a public limited company which was founded in april
1907 in london
 BRITISH PETROLEUM COMPANY

• BP plc (formerly the british petroleum company plc and BP amoco plc) is a
british multinational oil and gas company headquartered in london, united
kingdom.
• It is one of the world's seven oil and gas "supermajors",whose performance in
2012 made it the world's sixth-largest oil and gas company, the sixth-largest
energy company by market capitalization and the company with the world's
12th-largest revenue (turnover).[4]
• It is founded in april 1909 and its products are petrolium, natural gas, motor
fuels, aviation fuels, petrocheemicals etc.
 STATOIL

• Equinor ASA (OSE: EQNR,

formerly statoil and statoilhydro) is a norwegian multinational
energy company headquartered in stavanger, norway.
• It is primarily a petroleum company, operating in 36 countries
with some investments in renewable energy.
• The company has about 20,200 employees.[2]
• The current company was formed by the 2007 merger
of statoil with the oil and gas division of norsk hydro.[5]
 S &P GLOBAL PLATTS

• S&P global platts is a provider of energy and commodities

information and a source of benchmark pricing assessment in the
physical commodity market.

• The business was started with the foundation in 1909 of the

magazine national petroleum news by warren c. Platt
• The company has about approximately 1000 employees.
• Its products are energy, oil and gas, petrochemicals, metals and
agriculture
 CRUDE OIL PRICE FIXING SCANDAL
• The case of crude oil price rigging illustrates how prices in
the global crude market are decided by a very small number
of market players but whose decisions impact billions of
people around the world.
• Price rigging in energy markets can inflate prices of
everything from gasoline to cosmetics as crude oil is a
universal intermediate.
• Price rigging is an illegal action that occurs when parties
conspire to fix or inflate prices to achieve higher profits at
the expenses of consumers.
• It is also known as price fixing or collusion.
• Oil prices have been manipulated by a
handful of players for more than a decade.
• The companies which are involved in the
manipulation includes :
• SHELL
• BP
• STATOIL
• PLATTS
• Big oil companies had colluded in reporting distorted prices
to one of the price reporting agencies (pras) to potentially
manipulate the published prices of oil and bio-fuel products.
• Oil prices serve as benchmarks for trillions of dollars of
securities and contracts.
• Therefore, manipulation in oil prices has wide-reaching
consequences.
• Even small distortions can have a huge impact on the
purchase and sale prices of crude oil, refined oil products
and bio-fuels.
• The benchmarks prices published by platts are used to
determine what refiners pay for crude oil and distributors
pay for diesel fuel and gasoline. ( 80 percent)
• This is not the first time that oil companies have been
subjected to EU antitrust scrutiny.
• In september 2006, 14 companies were found involved in
fixing the price of bitumen – a petroleum by-product.
• They were asked to pay a fine of $346 million.
• Shell received the biggest penalty for being a repeat
offender.
• In october 2007, BP agreed to pay $303 million to
settle charges for cornering the market for TET
propane and attempting to manipulate its prices.
 WHAT HAPPENED NEXT

• The EU commission says there is no deadline for finishing the

investigation and it could take years before its final conclusions
are known.
• Tougher rules and regulations overseeing each participant in the
pricing process, from price reporting agencies to traders.
• Ec stated that any such behaviour if established may amount to
violation of european antitrust rules that prohibit cartels and
restrictive business trading practices and abuses of a dominant
market position.
• Even small distortions of assessed prices may have a huge impact
on the prices of crude oil, refined oil products and bio fuel
purchases and sales, potentially harming the final consumers.
FINDINGS OF CRUDE OIL
PRICE FIXING SCAM
 BP AND SHELL RAIDED IN EUROPEAN COMMISSION
PRICE-RIGGING INQUIRY
• European commission carries out 'unannounced inspections' to
investigate claims prices were rigged for more than a
decade
• 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 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".
• Four months ago the office of fair trading (OFT)
ruled out an investigation into petrol price fixing
after finding "very limited evidence" that pump
prices rise quickly when the wholesale price goes
up but fall more slowly when it drops.
 EFFECT AND IMPACTS

• These three oil companies are the major producers

in the international energy industry.
• They contribute to plats moc pricing process.
• The alleged price rigging has been going on since
2002.
• Between then and now petrol prices have rising by
an astonishing 80% to an average of 135p a litre
• Price rigging affected the cost of everything from
gas to chemicals used to make plastic in products.
• The social lives of 54% of people are being
negatively affected by the high price of fuel.
• Tough action from the government on this and that
means putting the oil price fixers in prison if they
are found guilty.
• Huge financial penalties or even a windfall tax on
those found responsible with the money given back
to motorists.
 CONCLUSION
• Here we discussed about the case of crude oil price fixing
scandal.
• How prices in the global crude oil market are decided by a
very small number of market players but whose decisions
impact billions of people around the world.
• Companies involved(shell,bp,statoil,platts)
• The rise in the petrol prices effects the poor people who owns
motor vehicles which may ultimately effect their family budget.
• And finally penalties and fines were imposed on those
companies who were found guilty.