WASHINGTON (AP) - Detailed allegations by federal investigators that BP traders illegally manipulated propane prices in 2004 could hurt the oil and gas industry's image at a time when consumers and Congress are upset about soaring energy costs and record profits.
The Commodity Futures Trading Commission said Wednesday that BP traders -- with the consent of senior management -- "purchased enormous quantities of propane to establish a dominant" position in the market and then withheld fuel in order to drive prices higher
According to the CFTC lawsuit, which was filed in the U.S. District Court for the Northern District of Illinois, the plan to manipulate prices and pump up profits began to take shape in early 2004 amid declining propane prices that were particularly painful to BP because its traders had made significant bets that prices would rise.
Flynn said it was "ridiculous" for traders at a company the size of BP, which had profits of nearly $16 billion in 2004, to be engaged in such activity.
"It's sort of like Bill Gates going out and shoplifting a package of bubble gum," he said.
By the end of February 2004, BP controlled almost 90 percent of all the propane delivered on a pipeline that stretches from Mont Belvieu, Texas, to consumers as far away as New York, Pennsylvania and Illinois, investigators said. From the beginning of the month to Feb. 27, the cost of the liquid that is stripped from natural gas skyrocketed by more than 40 percent to about 90 cents per gallon -- "a price that would not otherwise have been reached under the normal pressures of supply and demand," investigators said.
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