Fuel Prices

Baroness Primarolo Excerpts

Thursday 13th September 2012 Commons Chamber

[Madam Deputy Speaker (Dawn Primarolo)]

Before I call the hon. Member for Harlow (Robert Halfon) to move the motion, I must inform Members that there will be a five-minute limit on all Back-Bench speeches. Depending on progress, it may be necessary to review that limit during the debate, but we will begin with a five-minute limit. I hope that the mover of the motion will bear that in mind.

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[Fiona O’Donnell (East Lothian) (Lab)]

On a point of order, Madam Deputy Speaker. This is a vital debate, but the Minister was not present at the beginning of it. I wonder whether you could rule on whether or not that showed a lack of respect for Members and for the public at large.

[Madam Deputy Speaker (Dawn Primarolo)]

Fortunately the Minister is now present to hear the debate, so no further comment is required from me.

[Robert Halfon]

I must say that I was disappointed by the hon. Lady’s point of order. I made it clear at the outset that this was not a party political issue, and the Minister could not have done more—in his present post, and when he was the Minister responsible for apprenticeships—to show that he cares deeply about issues of this kind.

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[Madam Deputy Speaker (Dawn Primarolo)]

I am sorry, but I could not see who the hon. Gentleman was in order to call him, because he had turned his back to me. May I remind Members that it is important for them to face the Chair? I could not recognise him from the back of his head, but I can now call Mr Lee Scott.

[Mr Scott]

I apologise, Madam Deputy Speaker, although some people do feel that that is my best side.

I congratulate my hon. Friend on securing the debate. Last weekend, I happened to have to drive up to Manchester, and I noticed on the M1 that there was a difference of some 12p between the price of petrol in Manchester and the price in London, although the dealership was the same. Surely there can be no explanation for that. Does my hon. Friend share my concern?

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[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Many Members are trying to intervene, and many of them are not on the list of speakers. There are also lots of Members on that list, however, and they may not get to speak if this opening contribution takes too long. I hope the hon. Member for Harlow bears that in mind.

[Robert Halfon]

May I therefore ask those who want to intervene but who are not on the list of speakers to make brief interventions, and those who are due to speak not to intervene?

We have established that fuel is more expensive than ever, and not only because of tax, but because of anticompetitiveness in the oil market, and we have seen that cheaper oil is not being passed on to motorists. Thirdly, there is the allegation of price-fixing. This means that, even if oil companies were doing the right thing, hedge funds and speculators are rigging the price of oil to keep it artificially high.

Many academics and financial journalists have said that is happening. In a groundbreaking article in The Daily Telegraph, Rowena Mason showed how oil price “benchmarks” are unregulated and—like LIBOR—are vulnerable to manipulation. The petrolpromise.com dossier shows that the Consumer Federation of America has raised the same concerns, as have Deutsche Bank, professors at the Massachusetts Institute of Technology, Maryland university and the London School of Economics. Bloomberg has investigated how banks are buying up strategic stocks of oil and hoarding them on ships at sea, or in underground silos.

A whistleblower who trades the oil futures market has contacted petrolpromise.com and given us a detailed statement about how the market is rigged. He says:

“I trade the oil market on a daily basis, and every day the price is manipulated—not just the daily benchmark price but the calendar spreads that make up a large part of the daily volume. All through July, for example, there has been a massive buying-pressure on oil futures for August and September 2012. Both were trading at around a $0.5c to $1 dollar premium. This gives a false impression of the market and inflates the price of the nearby oil price”.

He goes on to say:

“One part of the problem is a lack of market transparency. In the oil futures market, huge volumes are offered and then withdrawn without trading…There is no reason for this behaviour other than to distort market prices.”

He also says that

“unlike stocks and shares where large holdings have to be declared, in the oil market nobody knows where the money is coming from”.

He continues:

“Prices are particularly manipulated at the close of business, when ‘markers’ are set on an average of trades in the last three minutes of the trading session. Every day, around these times, I see that the structure of the market is being moved to bring prices in line with the trading books of whoever is manipulating the market…This is in order to fix the price and make sure a profit is shown on their books.”

It is a long statement, but I wanted to put the key parts of it on the record.

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[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. A large number of Members still wish to participate in the debate, which is due to end at 3.30 pm. I am therefore reducing the time limit to four minutes, and if necessary I will reduce it further. The more interventions there are, the slower progress we make. Those wishing to speak who intervene will find themselves moving down the list. I hope that Members will bear that in mind.