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<br />concept of cumulative deficiencies. Basically, this required that the differ- <br />ence between BPClls and actual sales, when these were below the BPCl, <br />would accumulate each month and before any new oil could be sold at new <br />oil prices from the property, the cumulative deficiency had to be eliminated. 9 <br />When FEO regulations under EPAA were issued in January 1974, old <br />oil was price controlled at $5.25/bbl while world market prices, controlled <br />by OPEC, were at about $12.00/bbl.15 This resulted in a weighted average <br />price of $9.00/bbl of crude oil to US refiners. The amount by which this <br />and subsequent monthly weighted average prices exceeded the May 1973 <br />acquisition cost could be passed through in the price of refinery products. <br /> <br />2.2.3.2 Exemptions from Price Controls. The EPAA initially exempted <br />stripper well production from price controls. To claim this exemption, the <br />property had to be certified as having production of less than 10 barrels <br />per day per well or less for 12 consecutive months. In May 1975, admini- <br />strative regulations allowed such properties to subsequently increase their <br />production and still remain exempt from price controls .16 <br />This measure was viewed by regulators as an incentive for increasing <br />domestic production from old wells in which recovery capability had de- <br />clined; however, significant increases could only be accomplished through <br />waterflood or enhanced recovery techniques which were likely to affect the <br />production of adjoining properties and, therefore, required unitization.* <br />In September 1978, regulations allowed for more favorable treatment of <br />stripper well properties that joined units .17 This action created some <br />increased incentive for producers to use enhanced recovery techniques. <br /> <br /> <br />2.2.3.3 Supply Allocation Programs Under EPAA. The regulatory programs <br />which held down prices were accompanied by regulatory programs for alle- <br />viating supply shortages in certain sectors. EPAA authorized such programs <br />for both crude petroleum and refined products. Basically, the programs <br /> <br />*Separate leases are joined by contract and managed for optimal pro- <br />duction as one property. <br /> <br />2-6 <br />