Investigation launched into `fixed' gas prices
Claims that wholesale gas prices have been subject to manipulation under investigation by the FSA and Ofgem.
Ofgem and the Financial Services Authority (FSA), the energy and finance regulators respectively, have launched an investigation into claims that wholesale gas prices are being manipulated.
A former trader turned whistleblower yesterday came forward with claims that the market has been subject to tampering in much the same way as the inter-bank lending rate Libor. To find out more about the Libor scandal, read Four thoughts about the Libor scandal.
The allegations
The whistleblower has been named as Seth Freedman, who worked as a price reporter at ICIS Heren, a company responsible for setting benchmark prices. He told the Guardian newspaper that traders had made clear to him that the manipulation of gas prices was taking place “on a regular basis”. And it’s the big names in the energy market who are alleged to be taking part.
He also claimed that price reporters were put under pressure by traders to change the prices they reported, while the information provided to reporters to help them establish prices is far from clear.
ICIS Heron has separately approached Ofgem with claims that it had seen evidence of suspect trading.
The claims have been denied by most of the ‘big six’ energy providers.
Why it matters
Wholesale gas prices are what energy firms pay for the fuel they buy, and subsequently provide to us. As a result they have a significant impact on the price we pay for our energy.
Energy firms have long been criticised for ramping up their bills when wholesale prices rise, but failing to cut prices when wholesale costs fall. If the markets have been subjected to this sort of manipulation, it may mean that we are all paying more for our energy than we should be.
What’s more, most of the big energy providers have already announced prices rises for this winter, which they have blamed on wholesale gas prices.
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LiamT. I agree with your comments about the 'self serving' politicians (I think the word politicians covers the description adequately and 'morons' is a bit limited in it's scope) and that the sale of the utilities doesn't seem such a good idea now. It did go a long way to paying off our national debt before Labour took over and raised more cash by selling off our gold reserves and then squandered the lot and a lot more before leaving us with the biggest growing national debt of all time. OK, 'squandered' is a bit harsh but it has left us with a more expensive public service sector and a lot of promises which the country cannot afford. We are in a ship which is almost fatally holed below the water line and trying to break the habit of drilling more holes in the misguided hope of letting the water out. The Tories have known this for some time and Labour are now reluctantly jumping on the bandwagon. As far as the general theme of the discussion is concerned we have a choice of bloated inefficient state management or private ownership which is accountable to it's shareholders. Originally the plan was that the shareholders would be the customers but we now have companies which are foreign owned by large multinationals and losing more daily. Perhaps this is one of the holes which should be given urgent attention so that efforts can be applied to rebuilding the economy to stop the country spending more than it earns and cut the tax revenues which are also leaking badly as a result.
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CuNNaXXa - i was referring to the tories selling off our public infrastructure to companies that want to make a profit from us. which they seem to be doing nicely dont they? i agree it would be nice to have some power over these self serving morons. since they forget they work for us!
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@ LiamT. Forget about those who voted Blue, count everyone who voted. Basically, when we vote, we are just voting on how we will get screwed. Each successive government, regardless of what colour, serves its own purpose, not ours. Being an MP is just the start of the Gravy Train. While the basic pittance of a salary is a measly £60,000, they can boost their earnings by claiming for everything from watching pr0n to renting their homes to other MPs and claiming rent back from renting from other MPs. In fact, if an accountant can make money disappear, an MP can make money re-appear in their own personal bank account. Talk about corrupt...
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16 November 2012