Another Big Problem for BP
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Another Big Problem for BP
SCOTT JAGOW: Somewhere, there’s a voodoo doll with the letters BP written on it. Here are some of the recent pins that’ve been stuck in the doll:
BP Pipelines in Alaska are corroding. Congress holds a hearing on that next week. Next month, BP goes to trial over a refinery explosion that killed 15 people. Regulators are suing the company for allegedly fixing the price of propane a couple years ago. And today, the Wall Street Journal said the government is looking at whether BP might have toyed with oil and gas prices too.
Now, many of these investigations go nowhere. But we wondered if this did happen, how could it happen?Hillary Wicai has more.
HILLARY WICAI: Tyson Slocum is with the watchdog group Public Citizen. He says energy giants are often made up of different entities. BP, for example, has a pipeline division and an energy trading business. Without a firewall between them, he says, it’s not hard for companies to manipulate markets.
TYSON SLOCUM:“Not everyone can get information on how much oil is moving through, where it came from, what price it originated at, where it’s being delivered to.”
But one of the world’s largest energy traders, like BP, with its pipelines and storage tanks could.
SLOCUM:“Companies are exploiting their insider information to the advantage of their energy trading operation, but at the detriment of the American consumer.”
Still, it’s hard to prove. Philip Verleger is an economist who follows the commodities markets.
PHILIP VERLEGER:“I’ve been chasing this rabbit around the field for 30 years. And it is one of the hardest things to talk about.”
Verleger says if an employee in one branch of the company talks to someone in another branch to improve their profits but not necessarily to influence the price, regulators would not call it manipulation. Severin Borenstein is director of the University of California Energy Institute. He says such actions could net a few cents per barrel for a short period of time.
SEVERIN BORENSTEIN:“Now a few cents in the price of oil on thousands and thousands of barrels can still amount to a significant amount of money.”
The Commodity Futures Trading Commission would not confirm whether or not the agency is investigating BP.
In Washington, I’m Hillary Wicai for Marketplace.
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