After it is pumped from the ground, crude petroleum is shipped to a refiner where it is refined into an array of petroleum products gasoline, heating oil, diesel fuel, lubricants, solvents, and many other products. FEO rules require refiners to establish base prices for these products calculated on the basis of May 15, 1973, prices plus increased costs of imports and of domestic crude petroleum. The rules prohibit price increases above base prices in transactions involving these products unless the increases are cost-justified and until the refiner files a price increase pre-notification, with 30-day waiting period to the Federal Energy Office. These rules are similar to the Cost of Living Council Phase IV rules covering the industrial sector of the economy by permitting price increases above base prices only to recover increased costs and only on a dollar-for-dollar basis. They apply to all sales by refiners to wholesalers, jobbers, and other resellers of these products. RETAILERS Current rules permit retailers to sell at ceiling prices established by adding to their May 15, 1973, price increased product costs incurred since that date. Retailers of special products i.e. gasoline, No. 2 heating oil, and No. 2-D diesel are limited to passing through these increases once per calendar month. The Federal Energy Office has also permitted two non-product cost increases at the retail level le on January 1 on special products and 2¢ on March 1 on gasoline (For the month of March only, gasoline retailers will be allowed to raise their prices twice once for the non-product increase and once for the product increase). IMPORTS - Federal Energy Office price controls reflect the reality that the United States has become increasingly dependent upon imported foreign petroleum. World prices for foreign oil are far in excess of U.S. controlled prices and consumers in other countries are bidding for foreign oil just as we are. Consequently, since companies must pay a higher price to import foreign petroleum products, FEO rules permit pass-through of these increased import costs in the form of higher prices. The rules, however, limit the price increases that may be placed on foreign imports to recovery of the increased costs of imports on dollar-for-dollar basis. 8582 FEDERAL ENERGY OFFICE NATIONAL UTILITY RESIDUAL FUEL OIL ALLOCATION Suppliers Percentage Notice Pursuant to the provisions of 10 CFR 211.163(b), 211.164 and 211.165 (d) (2), the Federal Energy Office (FEO) hereby provides notice of the volumes of residual fuel oil allocated to each utility for March 1974, and the percentages of such volumes required to be supplied by each supplier for delivery in March 1974. This information is set forth in the Appendix to this notice. Adjustments of certain supplier base period percentages have been made at the request of affected utilities, pursuant to the criteria of 10 CFR 205.24 and are reflected in the Appendix. The utility allocations were determined after review of the impact of reduced fuel supplies between utility and non-utility uses of residual fuel oil. In calculating the allocation level for each utility the FEO considered all of the factors enumerated in 10 CFR 211.163(b) and also the following other factors: 1. The data contained in the revised Federal Power Commission (FFC) form 23 submitted by utilities for March; 2. Utility residual oil requirements were assumed to be reduced as a result of conservation efforts by utilities designed to achieve at least seven (7) percent load reduction below normal trends; 3. Residual oil needs for utilities were assumed to be reduced as the result of contemplated power purchases from coal and hydro-based utility systems which were considered feasible by the Federal Power Commission; 4. Recognizing the general need for utilities to initiate inventory buildups after several months of declining inventories, a modest incremental increase has been included in the scheduled delivery levels above their burn level, adjusted for energy conservation. The individual utility inventory buildup is based upon an amount equal to approximately a fourday projected burn rate for each utility on the West Coast and Hawaii and three days for utilities in the remainder of the country. NOTICES The amounts shown in the Appendix are the quantities of fuel oil to be delivered to the utility listed during the month of March 1974. Some utilities will not receive any allocation for March. This is due to either the fact that these utilities either burn other fuels primarily and use residual fuel only for stand-by inventory purposes, or use residual fuel only in small percentages of the plant's capacity. In some of the latter instances, even the small amount of residual fuel involved is eliminated by the conservation guides established for utilities. Where the utility proposed burn was zero or negligible no inventory buildup was intended for the month of March. The Appendix provides the name of the suppliers obligated to supply each utility and the supplier's percentage and volume of the month's allocation. The first column of the Appendix lists each utility with its suppliers. The second and third columns provide each supplier's respective percentage and volume share of a utility's allocated volume. The fourth column provides the total volume for each utility from all suppliers. Following the name of certain suppliers, an additional supplier is shown in parenthesis. The supplier in parenthesis is presumed, on the basis of the best information available, to be the source of supply for certain resellers supplying utility end-users. This information is provided for the convenience of such suppliers and the FEO requests any additions or corrections in this regard be forwarded to: Residual Fuels Manager for Utilities, P.O. Box 2887, Washington, D.C. 20013. The Appendix also contains for the month of March the FEO recommended total residual fuel burn after conservation adjustments for the utility. Residual fuel delivery levels are keyed to the FEO burn. Thus, in March because of the proposed inventory buildup most utility companies are being allocated delivery levels in excess of the FEO recommended burn. The excess amounts are intended as an incremental addition to inventory. Adjustments have been made in the allocation levels of certain utilities to reflect necessary corrections in the delivery levels authorized in February. FEO expects the utilities to consume supplies at or below FEO burn levels which are based on the utilities' proposed burn less adjustments for conservation efforts. Where a utility fails to encourage conservation to observe FEO burn levels, its allocation for following months will be appropriately adjusted downward. FEO will consider special circumstances such as unexpected outages which may cause fuel consumption to exceed FEO burn levels in any month. The utility residual fuel allocation program is based in part on the data derived from utilities' filings of FPC Form 23. Prior to publication of the April allocation list any utility which requires residual fuel must submit a revised Form 23 to the FEO and FPC, to reflect any changes in need resulting from the March allocation or other factors which would assure updated information. As an addendum to the Form 23 revision, each utility must include the following data: 1. Ending February inventory (include any fuel to be credited to February allocation which is scheduled for delivery within the 12-day grace period provided for in CFR 211.165 (d) (3)); 2. Actual February residual fuel consumption and megawatt-hours generated from oil; 3. Actual net energy for load for February; 4. Total February residual fuel deliveries segregated by suppliers and by sulfur content; 5. Residual fuel deliveries scheduled during the 12-day grace period; 6. Maximum usable capacity of all onsite and nearby utility owned for leased residual storage tanks; 7. Capacity of any other offsite utility -owned or leased storage tanks. A copy of the revised Form 23 with addendum must be delivered to both the FEO and FPC by March 8, 1974. Any Form 23 received after March 8, 1974, may be limited to consideration in connection with the utility allocation program for May. Reports should be addressed to "Data Collection", FEO, Box 2887, Washington, D.C. 20013. WILLIAM E. SIMON, |