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Oil giants make an enormous amount of money, but that doesn’t stop them from manipulating the law to yield additional profits. Last week the offices of Statoil, BP, and Shell were raided by officials from the European Commission, who charged them with fixing prices for crude oil, biofuel and refined oil products. The US Justice Department is being strongly encouraged to investigate whether or not the behavior was repeated Stateside.

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In a letter last Friday to Attorney General Eric Holder, The Senate Energy and Natural Resources Committee Chairman expressed his anxiety over the EU scandal. “It is critically important to determine whether or not similar efforts have been made to manipulate U.S. oil indices by these firms or others,” he said. The EU officials are currently examining whether or not Statoil, BP, and Shell provided false information to Platts, a price and news agency owned by McGraw-Hill Financial.

In a market where even the smallest price distortion can have a massive impact on the economy, the sums reaped by the companies could be substantial. The numbers and amounts of products linked to oil are great, creating a cascading effect all the way down the manufacturing chain. The revelation of price fixing not only means that consumers have been paying too much to fill up their tanks, but also for everything that relies upon petroleum and biofuel for production such as food and clothing manufacture. High oil prices also exacerbate inflation and stunts economic growth by jacking up costs for businesses. The Energy Secretary from the UK, Ed Davey has said that he will bring the “full force of the law” down upon the companies if the accusations prove to be true.

Other evidence of shady behavior have been uncovered by The International Organisation of Securities Commissions (IOSCO), who were told by French company, Total that benchmark prices were inaccurate at least several time a year. A report by The Economist into trading by Swiss-based Guvnor also showed that prices for the oil giant Urals were subject to distortion. It may take the European Officials months or years to gather the necessary evidence to make a formal accusation, but a major overhaul of the system seems to be in order to keep greed and dishonesty from further corrupting the global market.

+ The European Commission

Via Grist/Economist

Images via Wikicommons users Jmabel and Peretz Partensky.