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<br />" <br /> <br />13 <br />out the EPAA control programs. Administrative responsibilities were <br />transferred from the Cost of Living Council to FEO in December 1973. * <br /> <br />2.2.3.1 Price Control Programs Under EPAA. The basic regulatory system <br />for controlling prices and supplies was developed under Phase I V of ESA. <br />Congress neither modified this system in EPAA nor specified how mandatory <br />prices were to be derived but, rather, gave the President broad authority <br />to "promulgate a regulation providing for the mandatory allocation of crude <br />oil, residual fuel oil, and each refined petroleum product, in amounts <br />specified in (or determined in a manner prescribed by) and at prices <br />specified in (or determined in a manner prescribed by) such regulation. ,,14 <br />The allowable ceiling prices for refinery products and retail sales were set <br />by FEO regulations at the posted selling price of May 15, 1973, and only <br />demonstrable cost increases have been allowed to be recovered through <br />price increases since that time.9 <br />Crude petroleum was controlled through a two-tier classification price <br />system. "Old" oil, or that from wells then in production, was priced at <br />the May 15, 1973, posted level. "New" oil could be sold at market prices <br />which were still relatively low at that time. <br />The system for calculating volumes of old and new oil was fairly com- <br />plex. The basis for determining volumes was the Base Production Control <br />Level (BPCL) of a producing property. The property's BPCL was defined <br />as the amount of oil sold from the property in corresponding months of <br />1972; 9 these quantities were supposed to represent the results of invest- <br />ments made with the expectation of receiving relatively low prices. New <br />oil consisted of volumes sold from an existing well in excess of the property's <br />BPCL or from a new producing property. 9 <br />To discourage producers from decreasing production in any month and <br />later increasing it to boost sales above the BPCL, CLC had established the <br /> <br />2-5 <br /> <br /> <br />*Five months later, in May 1974, the Federal Energy Office was <br />replaced by the Federal Energy Administration, which took over implemen- <br />tation of EPAAi see subsection 2.2.4. <br />