Gasoline Allocation:

A Chaotic Program in Need of Overhaul

EMD-80-34: Published: Apr 23, 1980. Publicly Released: Apr 23, 1980.

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GAO was requested to review the problems in the Department of Energy's (DOE) administration of its gasoline allocation program and to identify program weaknesses. The gasoline allocation program is the only program which can be used to manage the distribution of supplies when shortfalls are under 20 percent. Basically, gasoline allocations are determined by reference to a historical base period. Suppliers must sell to the same purchasers who bought during the base period, although the purchasers are not obligatd to buy the volumes offered them. The amounts purchased during the base period are used to determine the quantity to which purchasers are entitled. Priority is given to certain national defense and agricultural uses. The remainder is allocated to nonpriority purchasers as a fraction of the base period volume. Each prime supplier generally must use a uniform allocation fraction nationwide in distributing the gasoline, unless DOE directs or approves the use of a different fraction for a particular region. A "set-aside" program permits States to direct the distribution of a portion of the gasoline to meet hardship and emergency requirements within the State. Each prime supplier must set aside 5 percent of the supplies for this purpose. Firms can request an exemption from the regulations or appeal a DOE decision through the DOE Office of Hearings and Appeals.

Emergency response planning was incomplete and outdated. Federal and State Governments were ill-prepared to deal with their supply management role. The program operations were plagued by inadequate management and staffing, relentless demands for services, poor or totally lacking information systems, and unclear guidance and direction. The problems were reflected in the States' "set-aside" program operations. They were not prepared to deal with the sudden workload and were handicapped by the absence of clear, definitive guidance. The DOE audit activities were belated and of mixed success. A high incidence of possible violations of allocation program regulations was encountered. Despite its shortcomings, as presently designed and implemented, GAO favored efforts to make the allocation program an effective tool.

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