HOUSTON (FOX 26) - The $20 million fine isn't a big enough blow to kill BP, not by a long shot, but it's not good. It's complicated so let's boil it down to the basic elements. According to the Federal Energy Regulatory Commission, BP deliberately lost money on certain gas trades to make money on others.
Attorney Ty Kelly, who handles gas cases, says FERC says BP bet against itself and made sure it lost.
“They lost money in the physical market but made it back and more in the financial markets,” explains Kelly.
But according to FERC, the way BP did it was against the law and known as market manipulation. This allegedly happened in 2008 in the wake of Hurricane Ike when natural gas markets were volatile. BP allegedly tried to take advantage of that volatility.
With a $20 million dollar fine at stake, how much money did they actually stand to gain? $200,000 -- profits the company has to give back. Or maybe not.
BP plans to seek a rehearing with FERC or even take the agency to the court of appeals. According to a written statement from a BP spokesman, "This decision should be reversed both because there is no credible evidence that BP's natural gas traders engaged in any market manipulation and because FERC doesn't have jurisdiction over the trading at issue."
Kelly, who is currently suing BP himself, says the company absolutely has to appeal.
“A manipulation finding in this industry is a significant finding against them and I think they will try very hard to turn it around.”
The ruling could have an impact on future lawsuits and future gas deals. Some municipalities and utilities won't do business with companies that have a manipulation conviction. That's bad news if BP wants to stay at the top of the natural gas trading food chain.