Aggregate prices for No. 2 oils will remain 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 Adequate supply and the positive effects of oil to U.S. refineries [Section 4 (b) (1) (E)]. Because the regulations issued pursuant to 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 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 |