As a result, the report recommends that the U.S. Energy Information Administration (EIA) convene a panel from other government agencies, the oil industry, public stakeholders, and other analysts and data users to find ways to improve available information," according to a [image-nocss] report in the Oil & Gas Journal.
It said that on rare occasions, events such as Hurricanes Katrina and Rita in 2005 can put enough refining capacity out of commission to have an obvious impact on prices. "While extreme outages can cause large temporary price increases, such events were relatively uncommon during the period of our analysis," the report said.
During the period from 2002 through September 2008 in which GAO examined U.S. wholesale prices across 75 U.S. cities, the report said that of about 1,100 unplanned outages evaluated, 99% were associated with unbranded wholesale price increases of no more than 32 cents per gallon, and 75% were linked to increases of less than 6 cents per gallon in affected cities.
Planned outages, where refineries are shut down for maintenance or equipment upgrades, generally did not have a significant effect on wholesale product prices, it continued. Such shutdowns typically come when demand is seasonally down and interspersed among refiners and refineries, it said.
"In addition, the equipment and labor are generally booked months, or even years, in advance, and can be arranged with those customers with whom the refiners have long-term contracts at a cost less than would be required in an emergency or unplanned situation," GAO's report stated, according to the Oil & Gas Journal report.
It said that oil-industry representatives also told GAO's researchers that because a refinery must draw on a limited number of equipment manufacturers and skilled laborers, its maintenance plans eventually become public knowledge. "In this case, the market 'expects' the outage to occur; therefore, planned outages do not generally trigger significant price responses unless something unexpected occurs or the market is disrupted elsewhere," it said. Refiners also stockpile products to prepare for planned outages so they will not come up short while the plant work is going on, it added.
Unplanned outages, on the other hand, were associated with gasoline price increases, but the increases were generally small and depended on key factors, including whether the gasoline was branded or unbranded and the type of gasoline being sold, according to the report.
The report said that while agencies are taking steps to improve their data collection, existing federal data contain gaps that limit analyses of refinery outages' impacts on oil product prices and that, in some cases, do not reflect emerging trends.
"These data gaps created challenges to our, and another federal agencies', analyses and ability to respond to congressional inquiries," the report said. "Specifically, we were limited in this report in our ability to fully evaluate the price effects of unplanned outages at individual cities and a city's gasoline resupply options in the event of an outage."
GAO researchers' ability to evaluate price effects of unplanned outages in specific cities (such as Atlanta following Hurricanes Ike and Gustav) was limited because federal data do not link refiners with the cities they serve, GAO said. Federal data exist for most other refining activities, it added.
The congressional watchdog service said that it eventually purchased data from an energy consulting firm, Baker & O'Brien, which it found sufficiently reliable for the report's estimates but not sufficiently accurate to estimate effects in individual cities.
It said that the absence of key data also limits federal agencies' ability to monitor the effects of emerging trends, such as the growing use of ethanol and other biofuels, in U.S. oil product markets. "Specifically, we found that gaps in federal data do not allow agencies to track where gasoline blended with ethanol ultimately winds up in the fuel stream," the report said. "Not having this information may be at odds with consumers' interests."
The report recommended that the EIA's administrator assemble a panel of representatives from relevant federal agencies, the oil industry, public stakeholders, and other analysts and data users to develop a coordinated interagency strategy for closing data gaps. It said that such a panel could assess the costs and benefits of collecting more systematic information about which refiners serve which cities, and more discrete information about petroleum products' entry, flow, and exit through the U.S. pipeline infrastructure.
Click hereto view the complete GAO report.
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