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The European investigation (I, II) into oil benchmark pricing raises rarely voiced questions...

The European investigation (I, II) into oil benchmark pricing raises rarely voiced questions about the appropriate way to set prices. FT notes that Platts' reporters cover 400+ wholesale energy prices everyday and the information available to them is limited to what commodities houses and Big Oil are willing to disclose. The process is complicated by the fact that myriad factors ranging from small discrepancies in quality to the type of hull on transport tankers, make the process inherently subjective. Nevertheless, the ordeal looks quite a bit like the Libor and ISDAFIX probes: a benchmark to which trillions of dollars of assets are tied is determined by key players away from the public eye.
Comments (3)
  • DavyJ
    , contributor
    Comments (415) | Send Message
     
    For an excellent article on oil pricing, see this one by Kyle Spencer on November 2, 2012.

     

    http://seekingalpha.co...
    18 May 2013, 07:11 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    There may be no such thing as perfect price transparency, and there is also a propensity for market participants to influence the information, sometimes inadvertently. Clear cases of where the pricing was affected by withholding or putting forth false information is tough to sustain - though the claim here is that the infrastructure may be doing just that and profiting. This needs to be sorted out and understood better, but with the money involved it may get only so far...data and information are valuable to those with the proximity and "license" to collect and report. Some of those collectors invested in the infrastructure for these collection and reporting systems, and expect to be rewarded for their investment, though manipulation or exploitation is going too far. We see this issue repeatedly recently...imho the Libor situation was blown out of proportion, as interbank counterparties were eager to protect their skin, a natural reaction.
    18 May 2013, 07:33 PM Reply Like
  • sethmcs
    , contributor
    Comments (3131) | Send Message
     
    Ask the banks about interest rates -- we get LIBOR scandal. Ask the oil companies about oil prices -- we get..........

     

    Is anyone surprised???
    19 May 2013, 10:39 PM Reply Like
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