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OSP-76-13 1 (1976-02-09)

handle is hein.gao/gaobaaboh0001 and id is 1 raw text is: SASISTANT COMPTOLLER GENERAL OF THE UNITED STATES B-178205 February 9, 1976 III I IIII I~ DllIII IIIIII I l!li IlI The Honorable Les Aspin LM099955 House of Representatives Dear Mr. Aspin: Your letter of April 7, 1975, asked us to examine Gulf Oil O VU 0 . Corporation's double dip permitted by the Federal Energy Administra- tion's (FEA's) regulations for crude oil and to -determine whether appropriate corrective action was taken by Gulf. Double dip is term used to refer to a practice resulting from an FEA regulatiol interpreted by Gulf and several other oil companies to permit them to potentially recover certain increased product costs twice. However, most of the total increased product costs in question were not actually double dipped since these costs were not passed on to the consurmer in the form of increased prices. For the most part these costs were banked for a potential second recovery in the form of increased consumer prices at a later date. We examined FEA audit reports and related workpapers and inter- viewed FEA headquarters officials, the FEA audit team leader assigned to Gulf, and a Gulf official. We found that Gulf overbanked $119.7 million from February to September 1974 but 6id not pass any of this amount through to its customers. in June 1975 Gulf signed an agreement with FEA to take the proper corrective action to eliminate these costs. BAC KGROUND The Emergency Petroleum Allocation Act of 1973 (87 Stat. 627) was to help minimize the adverse impacts of short-term petroleum shortages by placing equitablE restrictions on supply, cost, and profit. The act, which was the basic legislative authorization for controlling petroleum product prices, expired on December 15, 1975. On December 22, 1975, the President signed into law the Energy Policy and Conservation Act which amended the Emergency Petroleum Allocation Act of 1973 and extended it until September 30, 1981. OSP-76-13

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