2. PROPANE (1) Coverage This allocation program applies to all propane mixes produced in or imported into the United States. The following are excluded from this program: (a) ethane, (b) propane in cylinders with a capacity of 100 pounds or less, provided that the cylinders are not manifolded at the time of sale, and (c) propane in hydrocarbon mixtures used within the producing refinery or plant for other than a feedstock. (2) Allocation Levels and Priorities levels of 100% of The regulations provide for allocation current requirements for the following end uses: Agricultural production Dispensing stations and resellers which sell bottled Emergency services Energy production Sanitation services Telecommunication services Passenger transportation services Medical and nursing buildings. The supply of propane for agricultural production (at 100% of current requirements) will not be subject to any pro rata reduction that otherwise might occur when a supplier or reseller has a National Allocation Fraction of less than 1.0. For other end-users of propane, allocations are based on the amount of propane consumed during the base period. Levels of allocation are as follows: Residential use Commercial use - - 95% of base period consumption 90% of base period consumption (or 210,000 gallons, whichever is less on approximately a monthly ratable basis) - Industrial use where no substitute for propane is Delivery Other transportation uses (those vehicles equipped to use propane as of January 15, 1974) -- 90% of base period consumption Petrochemical and petrochemical precursor production Schools - 90% of base period consumption The use of propane for peak shaving by gas utilities is limited to the volumes of propane equivalent to those amounts contracted for or purchased for delivery during the base period. (3) Supplier/Purchaser Relationships Propane suppliers shall deliver to other suppliers either (a) the same proportion of their total propane available for sale, transfer, or internal use as a raw material feedstock as they delivered in the period October 3, 1972 through April 30, 1973, or (b) the actual supplier/other supplier contractual volume during such period, whichever is less. All suppliers of propane shall continue to supply all of their resellers of record during the base period as well as all of the purchasers assigned to them by FEO. Suppliers, resellers, and end-users who did not have a supplier during the base period or have had a substantial increase in propane requirements since the base period may apply for an assignment of a supplier or an adjusted base period volume through the appropriate FEO Regional Office. The FEO may order the sale of propane by suppliers or endusers in order to alleviate imbalances, order the transfer of propane from one area to another, reassign purchasers, or make other adjustments as necessary to achieve a more equitable distribution. (4) Method of Allocation and Distribution Propane suppliers and resellers shall provide propane for priority requirements to those to whom they sold or had a contract to sell propane at any time subsequent to August 31, 1973. Suppliers or other resellers must provide, to resellers to whom they sold or transferred propane during the period October 3, 1972 through April 30, 1973, the volume they need to meet the needs of their priority customers. Nonpriority users may receive some fraction of the propane remaining after the priority customers receive their requirements. (5) Storage Operations Special provisions of the allocation program will monitor the release of propane from large storage and merchant storage facilities so as to direct the flow of propane from storage to priority end-users, and limit the consumption of propane for nonpriority use. (6) State Set-Aside The state set-aside for propane has initially been set at 3% of all propane offered for sale in a given state by suppliers as defined in the propane program. The state controlled set-asides shall be directed to alleviate temporary hardship and emergency situations. (7) Determination of Propane Prices The regulations provide for a maximum to be placed on the amount of increased product costs incurred after January 31, 1974, that can be allocated to propane during the twelve (12) month period following that date. The total amount of increased product costs that may be allocated to propane must be directly proportional to the ratio that the total sales volume of propane bears to total sales volume of all covered products of a refiner during the twelve-month period following January 31, 1974. For example, if a refiner's total sales of propane for the twelve-month period equal ten (10) percent of total sales volume of all covered products, the increased product cost incurred during that period for propane may not exceed ten percent of this total increased product cost for this same twelve-month period. The new rule does not change the base price method of calculating prices for covered products. A refiner may allocate his increased costs disproportionately to his sales of propane in any month of the twelve-month period, provided the overall ratio for the twelve-month period meets requirements. Increased product costs incurred prior to January 31, 1974, may also be "banked" and carried forward as increased costs, to justify an increased base price in a future month. |