The U.S. futures industry regulator said Wednesday that a U.S. unit of BP Plc. tried to manipulate U.S. propane prices by cornering the market in February 2004.
"With the knowledge, advice, and consent of senior management, BP employees developed and executed a speculative trading strategy in which BP cornered the February 2004 ... physical propane market," the Commodity Futures Trading Commission alleged in a 42-page complaint filed in a U.S. district court in Illinois.
BP denied that any market manipulation occurred and will contest the charges in court, company spokesman Ronnie Chappell said. BP has dismissed several employees for failing to comply with its guidelines, and cooperated fully with CFTC investigators, Chappell said.
"Market manipulation did not occur and we are prepared to make and to prove that case in courts," he said.
Employees at BP Products North America Inc., a wholly owned subsidiary of BP Plc, sought a profit of at least $20 million through its actions, the CFTC said. BP is the largest supplier of propane in North America.
"Cornering a commodity market is more than a threat to market integrity," said Gregory Mocek, the CFTC's enforcement director. "It is an illegal activity that could have repercussions for commercial market participants as well as retail consumers around this country."
According to the CFTC's complaint, BP employees bought "enormous quantities" of propane, until it owned more than 88 percent of all supplies to be delivered through the TEPPCO products pipeline from Mont Belvieu, Texas, to markets in the Northeast and Midwest United States.
BP had a "dominant and controlling position" in propane that allowed it to drive prices up above 90 cents per gallon on Feb. 27, 2004, the CFTC said.
Most of those supplies were going to retain customers in rural areas to heat their homes, the CFTC said.
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.