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Was the petrol price rigged too?
By Rowena Mason and Emma Rowley
The Telegraph, London
Sunday, July 15, 2012
http://www.telegraph.co.uk/earth/energy/fuel/9401934/Libor-scandal-Was-t...
Concerns are growing about the reliability of oil prices, after a report for the G20 found the market is wide open to "manipulation or distortion."
Traders from banks, oil companies, or hedge funds have an "incentive" to distort the market and are likely to try to report false prices, it said.
Politicians and fuel campaigners last night urged the Government to expand its inquiry into the Libor scandal to see whether oil prices have also been falsely pushed up.
They warned any efforts to rig the oil price would affect how much drivers pay at the pump, which soared to a record high of 137p per litre of unleaded earlier this year.
Robert Halfon, who led a group of 100 MPs calling for lower fuel prices, said the matter "needs to be looked at by the Bank of England urgently."
... Dispatch continues below ...
Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters
From a Company Press Release
November 22, 2011
VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.
"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."
Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.
For the company's complete press release, please visit:
http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
"We need to know whether the oil price has been manipulated in a similar way to Libor," the MP for Harlow said. "This impacts on millions of people all round the country concerned about the price of petrol at the pumps."
Petrol retailers use oil price "benchmarks" to decide how much to pay for future supplies.
The rate is calculated by data companies based on submissions from firms that trade oil on a daily basis -- such as banks, hedge funds, and energy companies.
However, like Libor -- the interest rate measure that Barclays was earlier this month found to have rigged -- the market is unregulated and relies on the honesty of the firms to submit accurate data about all their trades.
This is one of the major concerns raised in the G20 report, published last month by the International Organisation of Securities Commissions (IOSCO).
In the study for global finance ministers, including George Osborne, the regulator warns that traders have opportunities to influence oil prices for their own profit. It points out that the whole market is "voluntary," meaning banks and energy companies can choose which trades to make 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."
In an earlier report, the regulator concluded: "It is open to companies to report only those deals that are in their own best interests for the rest of the market to see."
The price reporting agencies, Platts and Argus, argue they employ journalists to weed out false data submitted by oil traders.
IOSCO says reporters are "well aware that traders have an incentive to push the market one way or another and do not generally believe everything they are told."
However, it points out this system is heavily reliant on the "experience and training" of journalists to make a judgement about what the oil price should be.
Further alarm bells are being sounded by US regulators, who have already pointed out the rate-rigging scandal could spread to the oil market.
Scott O'Malia, a top official at the US Commodities Futures Commission, has drawn attention to the "striking similarity" between the potential for manipulating oil and Libor.
British regulators carrying out the Wheatley Review into the Libor scandal have this week signalled they will look into whether other markets were skewed.
Paul Tucker, the Bank of England's deputy governor, told MPs that Barclays' abuse of the Libor system may be only one part of the banks' dishonesty over crucial financial information.
Politicians last night called on the Bank of England and the Government to take heed of IOSCO's finding about the oil market to prevent another crisis of confidence in the banks.
Lord Oakeshott, the former Liberal Democrat Treasury spokesman, said the oil price system ought to be examined in the wake of the Libor scandal.
"Clearly it's right we must shine a light on how other crucial benchmark prices are reported, especially when they affect the cost of living for millions of motorists," he said.
Brian Madderson, chairman of the Petrol Retailers Association, also called for an investigation into the "alarming" conclusions of the G20 report.
"All the petrol retailers buy their products based on Platts prices," he said. "If IOSCO thinks the price is open to manipulation, it could well be, and that would affect prices on the forecourts."
Banks are also calling for reform of the oil price system, amid fears that it is open to abuse by a minority of traders.
Simon Lewis, chief executive of the Global Financial Markets Association, has raised concerns about the "opaque" way the oil price is worked out.
In a letter to IOSCO, he said price reporting agencies may not be as impartial as they claim, because they take fees from banks and oil companies to provide information.
"Incentives may arise to favour those who pay greater subscriber fees or provide greater access to market information," he said.
Some experts, such as Raymond Learsy, a former commodities trader and author of "Oil and Finance," have been warning for years that the oil market is open to corruption. "Given how important Libor is, if that can be manipulated, then why can't oil be manipulated?" he said. "The price lends itself to manipulation. The oil price is not a true reflection of supply and demand."
The reporting agencies have hit back at claims their prices are open to distortion. In a joint statement, Platts and Argus said there are "fundamental differences" in the way Libor and oil prices are reported.
"Independent price reporting organisations are independent of and have no vested interest in the oil and energy markets," they said. "Their ownership is transparent, and strict internal governance separates editorial and commercial functions. Independent price reporting organisations are not market participants, nor providers of transaction execution, clearing, or settlement services."
Platts added that there are four main differences between oil prices and Libor -- the quality of its data, its independence, competition between reporting agencies, and the transparency of its methodology.
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Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life
Company Press Release
VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.
The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.
The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:
Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day
Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."
For the complete press release, please visit:
http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res...
