AA ratchets up rhetoric as oil pricing concerns rumble on

The oil market's effect on petrol prices is back in the news after a feisty intervention by the Automobile Association attacking 'spivs and shady middle men'.

Paul Watters: head of public affairs at the AA
Paul Watters: head of public affairs at the AA

AA spokesman Luke Bosdet used the language as part of an appeal to the European Union and competition watchdogs to investigate the activities of less visible players in the oil market.

AA head of public affairs Paul Watters told PRWeek the call was part of the association’s strategy to combat high petrol prices by pushing for more market transparency.

Asked whether the AA was attempting to engage with the companies it was criticising, he said: ‘It’s more for them to come and tell us what their role is, explain their dealings and how they benefit consumers.’

The possibility there has been price fixing in the oil market was raised by the European Commission on Tuesday (14 May).

The EC announced it had carried out ‘unannounced inspections’ of premises belonging to several companies in the oil sector.

It said: ‘The commission has concerns that the companies may have colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products.’

Media reports have claimed that the companies raided were BP, Shell, Norway’s Statoil and price reporting service Platts.

The AA is focusing on other companies operating in the oil market by highlighting a report by the International Energy Agency.

The report said: ‘Increased European reliance on trading houses and third-party suppliers may also leave a growing share of European supply in the hands of market participants with a different set of incentives than those of refiners.’

Referring to the Office of Fair Trading’s decision in January that price rises in the UK’s retail fuel market had not been caused by a lack of competition at the pumps, Watters said: ‘We’re hopeful the investigations by the EC will lead to other lines of inquiry.’

These trading houses and third-party suppliers include firms such as Trafigura, Glencore, Gunvor and Cargill.

Trafigura made headlines in the UK in 2009 when it attempted to prevent the reporting of a question raised in Parliament with the help of law firm Carter Ruck.

In January PRWeek reported that Trafigura was set to hire former Financial Times editor Andrew Gowers to head its corporate affairs.

Today, Trafigura confirmed Gowers had started his role, but declined to comment on how it was handling media enquiries about the IEA report.

The EC’s investigation has sparked calls for one of the UK’s domestic regulators to become involved.

Looking at the challenge this poses to the Government, Insight Public Affairs director James Tyrell said:
‘It is important to remember that the oil-fixing allegations are currently rooted in speculation. Yet with the "cost of living" looking set to shape the 2015 general election debate, this represents another potential crisis for the Government. 

‘The Prime Minister says oil companies should face the "full force of the law" but needs to firstly identify the case that needs to be made. Downing Street’s immediate priority is to establish and make clear who will drive forward this investigation, be it the Office of Fair Trading or the Serious Fraud Office.

‘If breaches are found to have been made, the political capital to be made by reimbursing "punters at the pumps" is considerable and has to be considered.’

Kevin Bell, executive chairman at Maitland Political, said: ‘This is a complicated situation because oil is a deep and liquid market and prices are effectively set by OPEC controlling production. If there has been wrongdoing inquiries will involve regulators around the world, including from the US and it all could become highly political.’

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