ÆäÀÌÁö À̹ÌÁö
PDF
ePub

Aggregate prices for No. 2 oils will remain
unchanged by the exemption itself. Prices
can, however, be expected to rise over time
as the result of increased domestic and

foreign crude costs.

(5) Exemption of No. 2 oils from the price and allocation regulations is consistent with the attainment of the objectives set forth in section 4 (b) (1) of the EPAA.

Since an adequate supply is anticipated, the
continued allocation and pricing of No. 2
oils are not necessary to protect the public
health, safety and welfare, and the national
defense [Section 4 (b) (1) (A)]; the maintenance
of all public services [Section 4 (b) (1) (B)];
the maintenance of agricultural operations
[Section 4 (b) (1) (C)]; or the maintenance of
exploration for and production or extraction
of fuels and minerals [Section 4 (b) (1) (G)].

Adequate supply and the positive effects of
increased competition insure that the exemption
is consistent with the equitable distribution
of crude oil, residual fuel oil and refined
petroleum products [Section 4 (b) (1) (F)] and
that the exemption will have no adverse
effect on the allocation of suitable crude

oil to U.S. refineries [Section 4 (b) (1) (E)].

Because the regulations issued pursuant to
the EPAA are designed to deal primarily with
shortage conditions, the exemption is not
only consistent with but, in the current
period of ample supplies, should actually
facilitate the attainment of the objectives
of preservation of an economically sound
petroleum industry [Section 4 (b) (1) (D)];

economic efficiency [Section 4 (b) (1) (H)]; and

minimization of economic distortions, inflexibility,

and interference with market mechanisms

[Section 4 (b) (1) (I)].

The Findings and Views also state FEA's views concerning the potential economic impacts of exempting No. 2 oils from the Mandatory Petroleum Allocation and Price Regulations. It is not anticipated that there will be any adverse state or regional impacts resulting from the proposed exemption. In fact, governmental units which use large quantities of No. 2 oils will find that exemption will permit them to use competitive bids more easily. In addition, FEA anticipates no adverse economic impacts on the availability of consumer goods or services, the gross national product, small business or the supply and availability of energy resources as fuel or feedstock for industry. FEA expects that the exemption

will have a positive effect on competition.

The exemption

is likewise expected not to cause an adverse effect on employment or consumer prices. FEA's analysis of the effects of the exemption on the rate of unemployment in the U.S., on the Consumer Price Index and on the implicit price deflator for the gross national product are set forth in detail in the Findings and Views.

Allocation of Increased Crude Oil Costs to No. 2 Oils

The refiners' cost allocation formulae of $ 212.83(c) provide that the portion of a refiner's total increased costs of crude oil and increased non-product costs which are incurred in a month of measurement and which are attributable on a proportionate volumetric basis to the quantity of exempt products produced from crude oil must be excluded from the amount of increased costs which may be passed through in prices charged for covered (i.e., non-exempt) products.

Increased costs incurred with respect to purchases of exempt products are excluded from the total of increased costs of purchased product permitted to be included in maximum allowable prices charged for covered products. These exclusions effectively prevent increased costs incurred beginning with the month prior to the effective date of the exemption of a product and attributable to that exempt product from being passed through in prices charged for nonexempt products. The notice of proposed rulemaking noted

the substantial amounts of unrecovered increased costs currently allocable to maximum allowable prices for middle distillates and the fact that these increased costs could

be reallocated under current price rules to maximum allowable prices for gasoline prior to the effective date of the

FEA therefore proposed to

exemption of middle distillates. limit the reallocation of any increased costs attributable to No. 2 oils, effective as of the date of the April 21 notice. FEA requested comments on both the extent and the effective date of this proposed limitation in light of the seasonal pricing patterns for gasoline and certain middle distillates and any other historic pricing practices relevant to this

issue.

Parties commenting on this issue generally opposed reducing refiners' banked costs. The great majority of this opposition was voiced by refiners which stated that: (1) the limitation would be inconsistent with the general feature of the price rules permitting more than a proportionate amount of increased costs to be recovered in gasoline prices; and (2) the limitation would penalize refiners by causing them to lose unrecovered costs. Although the refiner price rules do permit a disproportionate allocation of increased costs to gasoline prices, in no event do the price rules permit increased costs attributable to exempt products to be recovered in lawful prices charged for covered products; and while it is true that the limitation would prohibit the recovery of

these costs in gasoline prices, it does not follow that
these costs are "lost". Such costs may be recovered without
any restrictions whatsoever in prices charged for the exempt
middle distillates to which they are properly attributable.
Accordingly, the refiner price rules are amended to prohibit
the reallocation of increased costs attributable to No. 2
oils, effective April 21, 1976. Other conforming amendments
to the price regulations of Part 212 are also being adopted
to reflect the exemption of No. 2 oils.

On April 28, 1976, FEA adopted reallocation of increased product costs provisions for resellers which granted them the same pricing flexibility previously restricted to refiners. The same reasons which have convinced FEA that the refiner price rules should be amended to prohibit the reallocation of banked costs attributable to No. 2 oils, effective April 21, 1976, are equally applicable to resellers. Therefore, conforming changes have been made to the reseller regulations in § 212.93 (i) (2).

Authority Delegated to the Governor of Puerto Rico

On March 7, 1974 the Administrator of FEA (then FEO) delegated to the Governor of the Commonwealth of Puerto Rico all authority previously delegated to the Administrator of FEO by section 3 (a) of Executive Order 11748 with respect to the allocation of several refined petroleum products, including middle distillate, within the Commonwealth of Puerto Rico. The March 7 delegation of authority, insofar as it applies

« ÀÌÀü°è¼Ó »