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Crude Oil Pricing—Current Regulations and Practices

Thomas A. Richardson, Proceedings of 23rd Annual Rocky Mountain Mineral Law Institute (1977)

This paper will describe the current pricing rules for domestic crude oil under the Federal Energy Administration (hereinafter FEA) regulations. Among the items to be covered are old, new and stripper well oil, key definitions, the treatment of unitized properties and proposals for pricing of high cost oil (oil recovered through tertiary recovery methods). President Carter's recent proposals for crude oil pricing will also be discussed.

Brief coverage will be given to the subject of FEA practices in the crude oil pricing area, including a short discussion of requests for exceptions and interpretations.

Statutory Requirements

Price ceilings for oil produced in the United States are mandated by the provisions of the Emergency Petroleum Allocation Act of 1973 (hereinafter EPAA),1 as amended by the Energy Policy and Conservation Act (hereinafter EPCA) and the Energy Conservation and Production Act (hereinafter ECPA). The EPCA directed the President (through his delegated representative, the FEA) to establish price controls on all domestic oil so that the average price (the Composite Price) for all domestic oil [804] produced and sold in February, 1976 would be $7.66 per barrel.

The FEA was given authority to establish categories of oil for pricing purposes. Authority was also given to allow price increases for the categories of oil which would r