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<br />prices and wages in August 1971 when gasoline prices were seasonably <br />high but heating oil prices were at their annual low. 8 <br />During Phase I, the CLC allowed companies to pass through costs <br />which exceeded historical. productivity gains except for gasoline, crude oil, <br />and heating oil which were termed "sensitive products." Prices for sensitive <br />products could only be raised after conducting public proceedings which <br />required about 2 years for completion.8 Oil producers and refiners were <br />allowed to receive payments offsetting about one-third of their costs during <br />that time.8 <br />Mandatory price controls were replaced by a voluntary program (Phase II) <br />in January 1973. During Phase II, prices rose dramatically, and the <br />administration reimposed mandatory controls as Phase III in March 1973.9 <br />In August 1973, Phase IV of the ESA program created the basic framework <br />for cantrall ing prices at the production, refin ing, and marketing stages <br />and remained the foundation of all subsequent petroleum regulatory programs. <br /> <br /> <br />2.2.3 Emergency Petroleum Allocation Act (EPAA) <br />The Emergency Petroleum Allocation Act 10 was enacted in response to <br />the crisis created by the Arab Oil Embargo of the fall of 1973. EPAA <br />granted the President authority to deal with the shortage in order to avert <br />severe disruptions in the US economy. As stated in the Conference Report: <br />"... it is imperative that the Federal Government now accept its responsi- <br />bility to intervene in this marketpiace to preserve competition and to <br />assure an equitable distribution of critically short supplies .,,11 The manda- <br />tory allocation program was to "be so structured as to prevent major oil <br />companies from inequitably restructuring crude production for their own <br />use or from favoring their directly-owned outlets over independent markets <br />in the sale or distribution of refined petroleum products.,,12 <br />Even though presidental authority under ESA did not expire until <br />April 1973 and the pricing control programs were being administered by <br />the Cost of Living Council, the EPAA is the first Congressional action <br />imposing mandatory price and allocation controls on the petroleum industry. <br />The Federal Energy Office (FEO) was created by the President to carry <br /> <br />2-4 <br />