“European Union’s top energy official ignored a warning delivered in 2009 about potential manipulation of Platts oil benchmarks “because markets trusted” them.
Andris Piebalgs, who was EU energy commissioner from 2004 to 2010, cited the confidence traders had in the pricing system when a lawmaker questioned the reliability of Platts’ prices more than three years ago. The warning went unheeded until May, when EU antitrust officials raided Platts, Royal Dutch Shell Plc (RDSA), BP Plc (BP/) (BP/), and Statoil ASA (STL) (STL) as part of an investigation into the possible rigging of benchmark energy assessments.
The EU’s oil probe escalated global action beyond financial benchmarks such as Libor, the London interbank offered rate. Regulators warned of “huge” damage to consumers if manipulation is confirmed and drew comparisons with the bank-rate scandal, which has seen Royal Bank of Scotland Group Plc (RBS), UBS AG (UBSN) (UBSN), and Barclays Plc (BARC) (BARC) fined about $2.5 billion. Platts publishes the Dated Brent benchmark that helps determine the price of more than half the world’s oil.
If the market “trusts” in the pricing-mechanism, then it “has a reason to trust,” Piebalgs, now the EU’s development commissioner, said in an interview in Brussels on June 27, referring to the oil-pricing system now under scrutiny. “I always believed that Libor is very reliable. It seems that sometimes things need to be checked.”
