Thursday, July 30, 2009

Energy Markets: Refinery Outages Can Have Varying Gasoline Price Impacts, but Gaps in Federal Data Limit Understanding of Impacts

This report by the Government Accountability Office (GAO-09-700) dated July 2009 argues that while some unplanned refinery outages, such as those caused by accidents or weather, have had large price effects, GAO found that in general, refinery
outages were associated with small increases in gasoline prices.

Large price increases occurred when there were large outages; for example, in the
aftermath of hurricanes Katrina and Rita. However, large price increases were rare, and on average, outages were associated with small price increases.

Factors influencing price volatility included whether the gasoline was branded—gasoline sold at retail under a specific refiner’s trademark—or unbranded—gasoline sold at retail by independent sellers.

Another factor that affected the size of price increases associated with
outages was the type of gasoline being sold. Some special blends of gasoline
developed to reduce emissions of air pollutants exhibited larger average price
increases than more widely used and available conventional gasoline,
suggesting that these special gasoline blends may have more constrained
supply options in the event of an outage.

Existing federal data contain gaps that have limited GAO’s and Department of
Transportation’s (DOT) analyses of petroleum markets and related issues.

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