[IP] more on why should we ever trust corporation -- BP Named in Inquiry on Pricing - New York Times
Begin forwarded message:
From: Gerry Faulhaber <gerry-faulhaber@xxxxxxxxx>
Date: June 29, 2006 9:45:31 AM EDT
To: dave@xxxxxxxxxx
Subject: Re: [IP] why should we ever trust corporation -- BP Named in
Inquiry on Pricing - New York Times
I was really surprised to see this article; "cornering the market" in
a commodity is almost always unprofitable, unless there's a truly
scarce bottleneck somewhere (as with diamonds, but not propane). I
have no doubt that people try to do it, but they usually fail.
I was heartened to read the last paragraph of the full article, which
should have been much more prominent: "In the end, the strategy
failed to reap the estimated gains because the high cost of building
up a dominant position was higher than the profits that were realized."
Good for the feds, but it is really the market that thwarted this ill-
conceived scheme.
Professor Gerald R. Faulhaber
Business and Public Policy Dept.
Wharton School, University of Pennsylvania
Philadelphia, PA 19104
Professor of Law
University of Pennsylvania Law School
----- Original Message -----
From: David Farber
To: ip@xxxxxxxxxxxxxx
Sent: Thursday, June 29, 2006 7:50 AM
Subject: [IP] why should we ever trust corporation -- BP Named in
Inquiry on Pricing - New York Times
http://www.nytimes.com/2006/06/29/business/29propane.html?
hp&ex=1151640000&en=8ed0d0dffad1dad2&ei=5094&partner=homepage
BP Named in Inquiry on Pricing
By JAD MOUAWAD
Federal regulators charged yesterday that BP manipulated the price of
propane two years ago by cornering the market through its dominant
position, pushing up heating costs for millions of households at the
peak of winter demand.
The Commodity Futures Trading Commission charges that at least six
current and former employees at a unit of BP North America squeezed
the propane market in February 2004, according to a civil complaint
filed in federal court. They sought to make at least $20 million in
profits, it said.
Also, the Justice Department said yesterday that one trader named in
the lawsuit pleaded guilty to a conspiracy charge in a parallel
criminal case. The plea is part of a continuing investigation by the
F.B.I.
"BP cornered the market on physical propane," said Gregory G. Mocek,
the director of the enforcement division of the trading commission, a
federal regulator that oversees commodity markets. "They used their
financial power to drive up prices."
,snip.
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