Were petrol prices fixed like Libor?

After the Libor scandal, reports have emerged which suggest that traders also manipulated the price of oil ..

After the Libor scandal, reports have emerged which suggest that traders also manipulated the price of oil. 

An official report for the G20 group of world leaders has speculated that reliability of oil prices is in severe question. 

The G20 report, compiled by the International Organisation of Securities Commissions (IOSCO), also claims that the market could easily be manipulated in the same way that interest rates were fixed resulting in the banking scandal which began at Barclays and looks certain to spread.

After falling down briefly, petrol prices on UK forecourts reached a record high of 137p per litre earlier this year. 

How is this price calculated in the first place? The cost of oil is determined via two main price reporting agencies: Platts and Argus. They use data collected from oil companies, hedge funds and banks to create an average.

The G20 report points out that the market works on a "voluntary" idea meaning that banks and energy companies get to choose which trades are made public. 

IOSCO says this “creates opportunity for a trader to submit a partial picture in order to influence the [price] to the trader’s advantage”. 

Because traders possibly have "an incentive" to play the market, the oil prices can fluctuate and distort the true price when the system depends on traders' honesty. 

Platts and Argus claimed that the system is different to the Libor model. In a joint statement, the companies said: "Independent price reporting organisations are independent of and have no vested interest in the oil and energy markets."

A spokesman for Prime Minister David Cameron said: “The important thing is that we have efficient and fair markets.

“If there is evidence that any market is being manipulated, that is a matter for the regulators and those regulators should look at it very carefully.”