Oil price rise blamed on watchdog

Soaring oil prices have been caused by the failure of the UK's financial industry watchdog to clamp down on speculation in the market, it has been claimed.

Professor Michael Greenberger, a former official at US regulator the Commodity Futures Trading Commission (CFTC), said the Financial Services Authority (FSA) had "let the British people down".

He said that if the FSA stepped in to stop speculation, the price of petrol at UK pumps would fall.

Professor Greenberger's comments came after oil prices soared past $140 (£75) a barrel last month, contributing to increased fuel costs for British motorists.

He said the rise was driven by traders speculating on the futures market, making money by gambling on the price of oil, and called for tighter US-style regulation.

"The FSA has let the British people down," Professor Greenberger told BBC Radio 4's The Investigation programme. "If the FSA adopted limits on speculation, you would see the price of gasoline drop in the United Kingdom."

An FSA spokeswoman refused to comment on Prof Greenberger's claims, but said the rise in the oil price was not purely down to speculators. The FSA agreed with the Treasury's view that the price rise was the result of global supply and demand, she added.

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