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DOCUMENT RESURE
07664 - [C3001D]
Federal Regulation of Propane and Naphtha: Is It Necessary?
END-Iq-73; B-178205. October 214, 1978. 39 pp. + appendix (2
pp.)-
Report to the Congress; by Elmer B. Staats, comptroller General.
Contact: Energy and Binerals Div.
Budqet Function: Natc=al Resources, Environment, and Energy:
Other Natural Resources (306); Natural Resources,
Environment, and Energy: Energy (305).
Organization Concerned: Department of Energy; federal Energy
Administration; Federal Energy Regulatory Commission.
Congressional Relevance: House Committee on Interstate and
Foreign Commerce; Senate Committee on Energy and Natural
Reaources; Congresso
Authority: Emergency Petroleum Allocation Act of 1973 (15 U.S.C.
751). Federal ELergy Administraticn Act of 1974 (15 E.S.C.
761). Executive Order 11790. =10 C.F.R. 211. H.R. 8444 (95th
Cong.).
Propane and naphtha are important to major segments of
the Nation's economy because they are used both as a primary
fuel and as feedstocks for certain industrial processes. Propane
and naphtha, along with other petrcleum-bated products, were
placed under Federal control by the Emergency Petroleum
Allocation Act of 1973. The responsikility for establishing and
carrying out the allocation regulaticns were delegated to the
Federal Energy Administration (FIA) and transferred to the
Department of Energy in 1977. ?indings/Conclusions: Under the
act's provisions, the F3A was required to distribute petroleum
products in scarce supply on an equitakle kasis. The prcpane
shortage did not develop to the extent anticipated when the
regulations were formulated. National supply levels have
exceeded the demand, and dcrestic production is expected to
remain fairly constant through 1985. Past shortages have
resulted more from distribution problems than from a supply
shortage. The propane allocation regulations are unclear and
ambiquous; as a result, the regulations are not understocd and,
in many cases, are ignered altogether. The propane allocation
program was supplemented with a program to provide State
officials with a quantity of fuel to allocate in emergencies,
but the State set-aside program did not always provide relief
for hardship or emergency conditions as was intended. The
program was underutilized either by choice or by ci-cumstances.
Since 1974, the purchase of propane and naphtha has bee.r
constrained by the FEA to limit expansion of the synthetic
natural gas industry. Recommendations: Bith regard to propane,
the Secretary of Energy should: take required steps to exempt
propane from allocation regulations kut continue mcnitcring
large users to assure that traditional and high-priority users
are not adversely affected; and continue tL4 use of the State](ViewImageLocal?handle=hein.gao/gaobaayfg0001&div=1&collection=&method=preview&ext=.png&size=3)