Branded gasoline is that supplied from major refiners and sold  at retail stations under these refiner’s trademarks, and often contains  special additives. In October 2008, we reported that unplanned and planned refinery  outages across the United States did not show discernible trends in the  frequency or location of outages from 2002 through 2007, with the  exception of impacts beginning in 2005 related to Hurricanes Katrina and  Rita. While Refinery Outages Can Have Large Price Effects on Rare Occasions, in Most Instances and on Average, Price Effects of Outages Are Relatively Small

While it can be expected that some refinery outages have quite large price  effects, the results of our analysis found that on average refinery outages  were associated with small increases in gasoline prices. Based on our  analysis of wholesale prices across 75 U.S. cities from 2002 through  September 2008, planned outages generally did not influence prices, while  unplanned refinery outages had generally small wholesale gasoline price  effects in the cities they serve. For example, as we recently testified, petroleum product  prices increased dramatically following Hurricanes Katrina and Rita. DOE reported that 21 refineries  in affected states were either shut down or operating at reduced capacity  in the aftermath of the hurricanes. Unplanned outages, on the other hand, were associated with gasoline  price increases but these increases were generally small and depended on  key factors, including whether or not the gasoline was branded or  unbranded and the type of gasoline being sold. Specifically, we found that for conventional gasoline—the most  common and widely available gasoline blend—unbranded gasoline had an  average 0.5-cents-per-gallon increase in price associated with unplanned  refinery outages, while branded gasoline had a smaller—about 0.2-cents- per-gallon—increase. Specifically, we were limited in this report in our ability to fully evaluate 1)  the price effects of unplanned outages at individual cities and 2) a city’s  gasoline re-supply options in the event of an outage. In a January 2009 Congressionally mandated study to identify potential  pipeline infrastructure constraints, DOT was unable to fully address the  study’s objectives due to the lack of appropriate federal pipeline flow and  petroleum product storage data. Despite these gaps in federal data, individual agencies have generally  continued to take steps to update their data collection surveys to meet  their respective agency objectives or needs, and have often coordinated to  more efficiently obtain petroleum product data needed for a variety of  purposes at multiple agencies. Nonetheless, in some cases the individual agency efforts have resulted in  the collection of information that does not necessarily meet the data needs  of other agencies or analysts who monitor petroleum product markets. The panel  should:    assess the costs and benefits of collecting    more systematic information about which refiners serve which cities  and    more discrete reporting of the volumetric entry, flow, and exit of  petroleum products through the pipeline infrastructure system; identify additional data that would be useful to track and evaluate  emerging market trends—such as the proliferation of biofuels and special  blends—and assess the costs and benefits of collecting such data; identify opportunities to coordinate federal data collection efforts so that  agencies can respond fully to Congressional requests and meet  governmentwide data needs to monitor the impact of petroleum product  market disruptions; and identify areas where data collection is fragmented—such as multiple  survey instruments collecting similar information—to determine if those  efforts can be consolidated and modified to enhance the overall usefulness  and improve the efficiency of collecting and reporting these data. We limited our analysis to  utages that (1) were determined to be of the largest 60 percent within  odel, we limited the effect of an outage on prices to one week, after  l for some of these factors. In addition, we found unplanned outages were significantly associated  with an increase in branded gasoline prices but the effect was  for unbranded prices.
Why GAO Did This Study

In 2008, GAO reported that, with the exception of the period following Hurricanes Katrina and Rita, refinery outages in the United States did not show discernible trends in reduced production capacity, frequency, and location from 2002 through 2007. Some outages are planned to perform routine maintenance or upgrades, while unplanned outages occur as a result of equipment failure or other unforeseen problems. GAO was asked to (1) evaluate the effect of refinery outages on wholesale gasoline prices and (2) identify gaps in federal data needed for this and similar analyses. GAO selected refinery outages from 2002 through September 2008 that were at least among the largest 60 percent in terms of lost production capacity in their market region and lasted at least 3 days. GAO developed an econometric model and tested a variety of assumptions using public and private data.

What GAO Found

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, we found that such large price increases were rare, and on average, outages were associated with small price increases. For example, GAO found that planned outages generally did not influence prices significantly--likely reflecting refiners' build-up in inventories to meet demand needs prior to shutting down--while for unplanned outages, average price effects ranged from less than one cent to several cents-per-gallon. Key factors influenced the size of price increases associated with unplanned outages. One such factor was whether the gasoline was branded--gasoline sold at retail under a specific refiner's trademark--or unbranded--gasoline sold at retail by independent sellers. Our analysis showed that during an unplanned outage, branded wholesale gasoline prices had smaller price increases than unbranded, suggesting that refiners give preference to their own branded customers during outages, while unbranded dealers must seek out supplies in a more constrained market. 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. For example: (1) Data linking refiners to the markets they serve were inadequate for GAO to fully evaluate the price effects of unplanned outages on individual cities, limiting the analysis to broader average effects. (2) Pipeline flow and petroleum product storage data were inadequate for DOT to fully address a January 2009 Congressionally mandated study to identify potential pipeline infrastructure constraints, and limited GAO's ability to identify re-supply options for cities experiencing outage disruptions. Federal agencies generally have continued to update their data collection surveys to meet their respective needs and emerging changes in the energy sector. However, in some cases the individual agency efforts have resulted in the collection of information that does not necessarily meet the data needs of other agencies or analysts who monitor petroleum product markets.