When government and oil industry officials talk about the Tilt Rule, they are referring to an accounting method that allows refiners to pass on to customers whatever it costs them to refine crude oil into gasoline - plus a percentage more.
This "tilting" of more profits into gasoline production was designed to provide an incentive to the refiners to spend more money on building refining plants for gasoline.
Generally, under the Tilt Rule, refiners are allowed to charge customers $1.10 for every $1 they spend to buy crude oil needed to produce gasoline.
In addition, the Tilt Rule allows refiners to pass on to consumers most increased operating costs incurred in the production of gasoline plus an additional percentage.
Thus Tilt allows a refiner to collect in two different ways: one for crude oil price increases, and one for operating cost increases. For the first, the companies get a straight 10 percent extra; for the second they collect on a sliding scale from 25 to 90 percent extra.
According to the sliding scale, if each barrel of crude were refined so that it yielded 10 percent gasoline, the oil company would be able to pass on its increased operating costs plus an additional 90 percent.
If each barrel were refined so that it yielded 50 percent gasoline, then the refiner would be able to pass on his increased operating costs plus 75 percent.
Because Tilt is pegged to an overstated percentage of a refiner's costs, what the consumer has to pay for gasoline at the pumps increases at a faster rate than the production costs do.