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'3 ~ASSISTANT COMPTROLLER GENERAL OF THE UNITED STATES 01 j
WASHINGTON, D.C. 20548
B-178205 June 24, 1974
The Honorable William J. Randall, Chairman,
Subcommittee on Legal and Monetary Affairs, l! C IIIIIhI IiI I l
S' Committee on Government Operations,
House of Representatives LM095819
K Dear Mr. Chairman:
In your letter of May 7, 1974, you requested that we evaluate the
effectiveness of the Cost of Living Council's (COLC) actions to assure
that cost increases for petroleum products were made in accordance with
the petroleum pricing regulations.
Responsibility for administration of the petro]1euM.pRncing.egu2la-
tionswas transferred from COLC to the Federal Energy Office (FEO) on 71c
December 26, 1973, as were all personnel in COLC's Energy Division. COLC
officials told us that we would have to contact former COLC officials now
working at FEO to obtain the needed information. Accordingly, our evalua-
tion included a review of the petroleum pricing regulations issued by COLC
and other information furnished us by the former COLC officials now working
at FEO.
Phase IV petroleum pricing regulations, issued by COLC on August 17,
1973, provided for the passthrough on a dollar-for-dollar basis of the
increased costs of crude oil occurring since May 15, 1973, to refined
petroleum products. On September 12, 1973, the regulations were revised
to include a formula for computing the increased cost of crude oil and
allocating it to refined products. The regulations did not require
refiners to provide cost information justifying price increases.
On October 10, 1973, however, the COLC issued letters to 18 major
refiners (accounting for 87 percent of the U.S. refining capacity), asking
them to supply calculations of costs passed through to purchasing companies
in the form of price increases. The refiners were furnished preliminary
worksheets to assist them in making their calculations.
On November 1, 1973, the COLC issued another letter to all refiners
requesting supporting cost and price data for the base month of May 1973.
On November 14, 1973, refiners were furnished revised computational work-
sheets. Small refiners were requested to make calculations and maintain
the worksheets as part of their books and records, subject to further
review by the Energy Division. About 26 major refiners, accounting for
over 90 percent of refinery capacity in the United States, were requested
to send the worksheets to COLC each month.](ViewImageLocal?handle=hein.gao/gaobaafox0001&div=1&collection=&method=preview&ext=.png&size=3)