Others share his distrust, not least authorities in Brussels. Last Tuesday it emerged three global powerhouses of the oil industry – BP, Royal Dutch Shell, and Statoil – along with Platts, a price reporting agency (PRA) whose judgment is regarded as gospel, are facing allegations of price fixing. The firms have confirmed they are the subject of an investigation by the European Commission (EC), the executive arm of the European Union, likely prompted by a senior whistleblower who has gone against his trade’s long-standing code of omerta. The scope of the inquiry questions the very integrity of a Byzantine enterprise worth billions of pounds that exists outside the net of statutory regulation. In essence, it is alleged some companies may have tried to manipulate the process by which oil prices are set by reporting distorted figures, and preventing other firms from submitting their own prices. Should investigators shine a light on errant practises, it could prove just as damaging for the complex realm of the commodities market as the London inter-bank lending rate (Libor) fixing scandal was for financial traders. Anyone found guilty of participating in the alleged cartel could face criminal prosecution, while the companies involved would face the prospect of fines in the region of several hundred million pounds.

This is not, however, an issue which affects a gilded few oligarchs and corporate chieftans in London, Moscow, and Texas. In a statement, the EC pointed out that even “small distortions” of assessed prices can have a “huge impact” on oil prices, potentially harming “final consumers”. The demographic of victims might include any family in Scotland with a car. Yet the repercussions, if proven, would not end there. They would trickle down from tankers, railways, and pipelines to cast a shadow over everyone. From household heating bills and cosmetics through to plastic bags and airline tickets, the reach of oil is far and wide, and while the transactions conducted in this arcane sector of the markets may be of scant interest to Abassi and the public at large, the fact is that they exert an acute and persuasive influence on innumerable facets of ordinary life.

An elaborate blend of trust, intuition, and interpretation, the process by which oil prices are calculated is the legacy of Warren Platt, a Delaware-born journalist who covered the local police beat and sports action at the turn of the 20th century. Fascinated by the rise of John D Rockefeller’s oil empire, he took a sideways step in 1909 when, aged just 25, he borrowed £1,640 from a personal insurance policy and set up his own monthly publication, National Petroleum News.

Envisaged as a way of promoting transparency in the burgeoning industry, the title proved a success, and by 1923, Platt began producing the Oilgram, a two-page newsletter mailed to subscribers the same day it was produced, using the mimeograph technique patented by Thomas Edison. Crude by today’s publishing standards, the Oilgram came complete with images of horse-drawn tank wagons. Its raison d’être, though, was the flurry of price and market information. All of a sudden, the denizens of the nascent US petroleum movement could pour a bourbon and study benchmark prices. Ninety years on, the principles of that niche enterprise remain in place, and Platt’s brainchild is the bible of Big Oil.

Every day, Platts uses a methodology known as Market on Close (MOC) to compile bid, offer, and transaction prices for trades in oil products, using information voluntarily provided by oil firms. Journalists and editors at the firm analyse the data during a half-hour period which begins at around 4pm in London. Known in the trade as the ‘Window’, its workings bind modern technology to old- fashioned techniques. A huddle of staff gather around computer screens to scroll through reams of numbers, while other reporters hit the telephones and instant messenger services to gather additional information and use their judgment to scrutinise what they are told. Once the collating is done, the firm publishes a final trading price for the numerous commodities. That information is used by other firms as a benchmark when they sell their oil products – such as petrol or jet fuel – to customers.

Although there are several other PRAs, Platts is dominant. Overseeing an industry worth £1.6tn a year, it is part of the McGraw-Hill financial behemoth, which enjoys annual revenues of more than £4bn. Observers in the oil business say the company has occupied a vacuum left by regulators, giving it immense power over the price of physical commodities markets such as Brent crude. “Platts is the main price reference for the physical oil market,” says Olivier Jakob, an oil consultant at Petromatrix in Switzerland. “If you were to close Platts tomorrow, you would have a very big problem.”

With power comes responsibility and throughout its history Platts has always made clear that it can only report the information it receives from oil firms, even if its accuracy turns out to be in doubt. Indeed, a passage from the 1954 edition of its Oil Price Handbook and Oilmanac still resonates today. “Information is deemed to be accurate and complete but is necessarily supplied without guarantee as to that completeness or accuracy.”

The burning question for the EC is whether the data used by Platts has been selectively disclosed. In his probing study of the oil industry, The Squeeze, Tom Bower relates an example of how its ‘Window’ is open to exploitation, citing a practice called ‘all-day capture’ or ‘shower deals’. He writes: “A trader who was contracted to buy, say, six tankers of oil with four million barrels would sell 600,000 barrels at a low price into the Platts window to depress the published price and, by fixing the bottom of the market at the end of the day, would hope to manipulate a low price for the six tanker he was contracted to purchase the following day.”

The EC’s inspectors spent several days last week at the Canary Wharf offices of Platts, going through laptops for information relevant to their investigation. Whatever the outcome, critics of the oil pricing strategy believe it is long overdue an overhaul. Quentin Willson, the campaign leader of Fair Fuel UK, said: “Currently the price reporting of this trillion dollar industry is overseen by a few unknown journalists and we have no idea of their standing, integrity or moral probity. That definitely isn’t good enough. There are dozens of decent, honest people out there with haversacks of integrity who could stand as incorruptible supervisors of the global oil price. If the industry has nothing to hide they’d have no objections to more transparent oil price reporting.”

Yet the subject has been far from hidden. Only last October, Total, the French oil giant, informed the International Organisation of Securities Commissions (IOSC) that figures are on occasion imprecise. In its submission to a questionnaire from the umbrella body for the world’s financial watchdogs, the company said: “The published prices do not always represent those of the market with the same degree of accuracy … the quality of the reporting is not always consistent over time. While certain price reporting agencies have pricing processes that are reproducible using the underlying data, others do not (the principal difference being the use of ‘judgment’ that may bias prices away rather than toward the market).”

Last year, meanwhile, a whistleblowing trader wrote to Robert Halfon, a Conservative MP, alleging daily manipulation of prices in the oil market. In turn, Halfon informed the Office of Fair Trading (OFT), but four months ago, the authority said it had decided against a full investigation into petrol price fixing. Competition in the sector, it said, was “working well,” and it had received “no credible evidence” to the contrary.

In light of the EC’s investigation, the organisation is now in the firing line for what many regard as its supine efforts. “The response from the OFT was limp,” said Halfon. “They carried out an investigation to stave off political pressure. It was a sweetener and they have massively let us down. They need to get their act together and have a full inquiry. They should be the ones raiding offices, not just the European Union investigators. So too, Angus MacNeil, the SNP MP, believes the OFT has questions to answer. He said: “The EU has shown another UK institution to be failing and therefore methodology and approach of the OFT needs to be looked at carefully.”

Under EU competition rules, companies that engage in anti-competitive behaviour can be hit for up to a tenth of their turn­over, a sizeable sum in the case of each of the firms under scrutiny, even if the punishments pale against those meted out to BP in wake of the Gulf of Mexico oil spill. But the growing disgust surrounding the allegations has increased the political pressure and prompted calls for extreme sanctions, such as windfall taxes imposed on the guilty. Prime Minister David Cameron has reserved judgment on the role of the OFT, but vowed action will be taken if the EC uncovers wrongdoing. “There is obviously the full force of the law available,” he said after news of the allegations broke. “Let’s let the investigators do their work. If this has been happening it is very, very serious and major consequences will follow.”

Ironically, the investigation may have the unwanted consequence of adding another layer to the sector’s impermeability rather than cutting through it. In the aftermath of the EC’s statement, the share price of BP remained largely unchanged, a sign that the markets regard the looming scandal as no match for political tensions or terrorism when it comes to impacting on bottom lines. There are also concerns that the fear of negative publicity could deter companies from submitting information to PRAs, weakening the effectiveness of the system.

In the meantime, all eyes are on the EC. With no legal deadline, quite how long its inquiry will take remains to be seen, although industry observers pinpoint the end of 2014 as a conservative estimate. The EC has stressed that its unannounced inspections were only a “preliminary step” into its probe of suspected anti-competitive practises, and the swiftness with which it fulfils its task depends on the complexity of the allegations and the co-operation of those they have been made against.

For the Abassi family, and millions like them across the country, the dealings of the commodity markets continue to prove obscure. Until the EC reports back, all that really matters to them – the price at the pumps – remains unchanged. It may be traded in an impenetrable matrix, but oil always has, and always will be, a ­human story.

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