You asked (1) why the prices of home heating oil and propane are not regulated and (2) whether there have been any bills in recent years to regulate the prices of these products.

SUMMARY

Historically, the prices of home heating oil and propane have been set by the market rather than by regulation outside of wartime. Congress adopted price controls on petroleum products, including propane, as a temporary measure in the wake of the 1973 oil embargo. President Reagan lifted the controls in January 1981, eight months earlier than previously scheduled. Reagan asserted that the controls had several negative effects, including depressing domestic oil production, increasing imports, and aggravating the nation's balance of payments problem. In Connecticut, the Department of Public Utility Control (DPUC) continued to regulate the price of propane supplied by natural gas companies (a small share of the total market), but ordered the companies to leave this business in the mid-1990s.

We have found no proposals to re-regulate the prices of these products in the past five years at either the federal or state level.

PRICE CONTROLS

Congress adopted price controls on a wide range of petroleum products following the first oil embargo, when the price of crude oil quadrupled. The Emergency Petroleum Allocations Act of 1973 (EPAA- PL 93-159) authorized the president to promulgate regulations regarding the allocation and pricing of crude oil and various petroleum products, including propane. EPAA was intended to be a temporary measure in response to a national energy crisis and was originally scheduled to expire on February 28, 1975. The act was subsequently amended to extend price controls, phasing them out by September 30, 1981. However, on January 28, 1981, President Reagan signed Executive Order 12287, which decontrolled the prices of oil and petroleum products immediately. In the message accompanying the order, Reagan asserted that the controls had

held U. S. oil production below its potential, artificially boosted energy consumption, aggravated our balance of payments problems, and stifled technological breakthroughs. Price controls have also made us more energy-dependent on the OPEC nations, a development that has jeopardized our economic security and undermined price stability at home.

In Connecticut, the DPUC continued to regulate the price of propane supplied by the two gas companies that sold it (Connecticut Natural Gas (CNG) and Yankee Gas Services). The companies supplied propane to customers in anticipation of expanding their natural gas pipelines to serve them. In 1993, DPUC determined that it was inappropriate for the companies to provide a service in competition with unregulated private vendors, who served most of the state's propane customers. It found that Yankee was charging rates that exceeded those charged by the private vendors. On the other hand, it found that CNG's natural gas customers were subsidizing its propane customers. DPUC ordered Yankee Gas Services to exit the propane business by 1994 and CNG to do so by 1995. The decision, docket 90-11-13 Part A, is available on DPUC's Website, http: //www. state. ct. us/dpuc/.

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