Marketplace Report: BP Sued for Propane Profiteering
More to come on NPR's DAY TO DAY.
ALEX CHADWICK, host:
Back now with DAY TO DAY. The US government has filed a lawsuit against British Oil giant BP for alleged price fixing in the propane industry. This suit says that BP traders artificially drove up the cost of propane. The company denies the allegation. MARKETPLACE's Janet Babin is here. Janet, it sounds like Enron all over, maybe a mini version of it. So, what is the government saying these traders did, and how did they do it?
JANET BABIN reporting:
Well, Alex, the traders are accused of cornering a section of the market in February, 2004. They set the price high and they withheld a certain amount of propane from the market, allegedly.
Regulators say the BP traders did this with the knowledge, advice, and consent of senior BP management. And like Enron, a lot of the evidence in the case appears, right now, to be based on wiretaps of BP staff. Like this one of former BP staffer Mark Radley(ph).
Mr. MARK RADLEY (Former BP Staffer): The more we stand to gain, is not just, we would make money out of it, but we would know from thereafter, that we could control the market at will.
Unidentified Speaker: It's a...
Mr. RADLEY: If we never break the threshold, we'll never know what the answer is. Do you know what I mean?
BABIN: And so even though these traders right there are talking about propane, many people might wonder, you know, whether companies are manipulating the oil and gas markets, too.
CHADWICK: You know, Janet, oil companies aren't so popular these days. I don't know that they ever are, but right now, all the profits they're making, the high price of gas, plus Congress has, you know, launched an investigation of their profits - so it's not really a good time for BP to face this scandal.
BABIN: That's right, and this is especially tough on BP, because of some recent negative incidents. In March, BP had a crude oil spill at one of its Alaskan facilities. And then last year, the government fined BP $21 million for a refinery explosion that killed 15 people.
I spoke to Tom Wallin about this. He's with Publisher's Energy Intelligence.
Mr. TOM WALLIN (Publisher's Energy Intelligence): It is ironic, in that BP has been quite successful at portraying itself as a company that's very forward-looking, that's embracing new technologies. And so having these kinds of events, I think, are something that is obviously a setback in trying to portray that positive imagine. And this isn't something that just BP is doing. All the major oil companies have been working hard at trying to explain to the public, you know, the complexities of this business.
BABIN: And in fact yesterday, Shell Oil announced that it's sending some of its top executives on a 50-city tour this summer, to talk to customers.
CHADWICK: Janet, how many people use propane now, and what do they use it for?
BABIN: Well, propane has a lot of uses, Alex, but mainly it's used for heating. It's often the fuel of choice for people in poorer communities and rural parts of the country that aren't served by natural gas pipelines.
Coming up later today on MARKETPLACE, we'll take you to the streets of Mexico City, just ahead of Sunday's presidential election.
CHADWICK: Thank you, Janet. Janet Babin of Public Radio's daily business show MARKETPLACE, produced by American Public Media.