Department of Energy Needs To Resolve Billions in Alleged Oil Pricing Violations

Gao ID: EMD-81-45 March 31, 1981

Congress attempted to minimize the effects of rapidly increasing prices for imported oil by passing the Emergency Petroleum Allocation Act which established petroleum pricing controls. The Department of Energy (DOE) seeks to identify oil pricing violations, recover oil company overcharges, and obtain restitution for parties injured by the overcharges.

DOE has alleged billions of dollars in oil pricing violations but has not been able to effectively enforce pricing regulations, primarily because of oil industry legal challenges. In many cases, DOE has attempted to avoid the cost and time involved in litigating civil cases by negotiating settlements with companies. However, less than one-third of the total alleged violations had been settled as of January 1981. In addition, DOE has generally been unable to obtain restitution for parties that have been injured through overcharges. The major obstacle to making restitution is the inability of DOE to identify precisely who has been injured by overcharges, since in many instances the overcharges were passed through the marketing chain in subsequent sales.

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