The Federal Trade Commission said in a statement it had issued a rule that “will prohibit fraud or deceit in wholesale petroleum markets, and omissions of material information that are likely to distort petroleum markets.”
Anyone who violates the rule faces civil penalties of up to one million dollars per violation per day, the FTC said.
The rule takes effect on November 4.
Clearly manipulation has been going on in the global market in oil – there’s nothing new about that – it’s what intermediaries who transact for profit do and have always done. Indeed, some market wags say that trading could be defined as “acceptable market manipulation”. But until the last few years what consenting adults were doing among themselves in the oil market didn’t really affect the man in the street.
But things have changed. We have now reached the culmination of a process of financialisation of the oil market to a degree where the market has become entirely sociopathic. It now operates to the detriment of consumers and producers alike and for the benefit of the intermediaries who control the market.
How did we get here? Who’s doing it? How are they doing it? And what can be done about it?