LONDON -- Federal investigators are examining whether BP PLC manipulated crude oil and unleaded gasoline markets, signaling a rise in regulatory scrutiny of the British energy company, said lawyers and traders close to the case, according to a Wall Street Journal report.
BP, which has been summoned before the House Energy & Commerce Committee next week over problems in its Alaska pipeline operations, already faces a civil complaint filed by federal commodities regulators for allegedly manipulating much of the U.S. market for propane. The separate [image-nocss] investigations on crude oil and gasoline could intensify public and political pressure on BP because these markets are bigger and directly affect most American households, the report said.
The Commodity Futures Trading Commission has sent subpoenas to BP and energy traders in the crude-oil probe, which is focused on possible manipulation of the global over-the-counter market in 2003 and 2004, the newspaper said, citing lawyers and traders who have been contacted or briefed in the civil investigation.
The separate gasoline inquiry, which has been under way more than a year and includes a criminal probe by the Department of Justice, is examining a single day's trading on the New York Mercantile Exchange (NYMEX) in 2002, the lawyers and traders close to the case said.
A spokesperson for BP in the United Kingdom told the Journal, "We are aware of investigations being done by the [U.S.] authorities, and we are cooperating fully." He didn't elaborate on the nature of the investigation. People at other firms said many trading firms had received CFTC demands for information, suggesting that the investigation went beyond BP.
In the broader civil investigation into crude-oil trading, investigators are examining, among other things, whether BP used information about its own pipelines and storage tanks at a key oil delivery point in Cushing, Okla., to influence crude-oil price benchmarks that are set each day and influence billions of dollars of transactions.
No charges have been brought against BP in the crude-oil inquiry. An earlier CFTC investigation into BP's crude-oil trading was closed without charges. In 2003, the report said, BP agreed to pay $2.5 million in a settlement with NYMEX to resolve allegations of improper crude-oil trading. The settlement cited 10 oil violations in 2001 and 2002, which included wash trades, or simultaneous swaps of the same amount of a commodity for the same price. BP settled the matter without admitting or denying wrongdoing; the specific nature of the trades wasn't disclosed.
A BP spokesperson told the paper, "We always assist regulators and other authorities in terms of helping them understand the facts around how our supply business works." At the end of 2005, BP controlled as much as 30% of the available storage at Cushingwith some estimates of its holdings even higherand its dominance of the crucial delivery point was a stumbling block to its buyout of Arco in 2000, the report said.
The Federal Trade Commission (FTC) eventually forced the companies to sell certain assets at Cushing to avoid antitrust problems. But BP's dominance remains a lingering concern, said the report.
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