The White House Council on Wage and Price Stability has begun a special inquiry into whether the major oil companies have violated price guidelines by significantly increasing heating oil refinery profit margins.
If any major company has exceeded the guidelines, it could be barred from selling oil to the government, and subjected to increased surveillance under other federal regulations, council staff members say.
Energy Department and oil industry officials remain skeptical about the review having any conclusive impact on the major companies.
Since January the nation's heating oil prices haven risen from 56.4 cents to over 80 cents a gallon; prices refiners pay for crude oil have not risen as much.
Complex voluntary pricing guidelines would hold the major oil companies to a 6.5 percent increase in their refining profit margins.
"I am not accusing anyone, but we are looking at it to determine if there is any widespread noncompliance," Alfred Kahn, head of the council, said in a phone interview yesterday.
The administration's chief inflation fighter went on: "It appears that there were a fair number of violations of our standards in the third quarter of the year, but the violators were almost all smaller companies."
Council sources say it has requested refining profit data from more than 50 companies, which together account for 95 percent of the nation's refining capacity.
Earlier this year, in its only major action against an oil company, the council secured an agreement from Amerada Hess Corp., a major East Coast firm, to bring its prices into line with the administration's guidelines.
Only one oil firm, Charter, a refiner and marketer in Jacksonville, Fla., remains on the noncompliance list.
Council sources said Amerada Hess cut its prices after White House of officals suggested that Hess could lose its lucrative regultory subsidies, including the right to use low-cost foreign-flag tankers, if it didn't comply.
In recent months Wall Street security analysts have been pointing to significant increases in the oil industry's refining margins as one factor in higher profits.
Michael Gordon, an oil analyst with L. F. Rothschild & Co., said yesterday that "gross refining margins have widened dramatically" over the last year -- from $1.60 a barrel to $4.75, after taking into account the rise in crude oil prices.
For consumers, this extra $3.15 a barrel at the refinery translates into 7.5 cents a gallon in higher fuel prices. Because of Energy Department regulations and competitive factors, though, the major oil companies shift their profits onto one product -- such as heating oil -- while taking smaller profits on other products such as gasoline or residual fuel oil.
While most of the major oil companies do not publish their profits from refining separately, combined profits from refining, marketing, and transportation are up sharply this year at a number of companies.
Gulf, Atlantic Richfield, Cities Service, Continental and Phillips are among those with markedly higher profits from refining, marketing and transportation, analysts say.
According to recent published reports from Smith Barney Harris Upham & Co., Atlantic Richfield's profits from refining, marketing and transportation during the first six months this year averaged $1.34 per barrel, compared with 85 cents last year.
Phillips last year reported earnings of 19 cents a barrel from refining, marketing and transportation; this year the Bartlesville, Okla., major earned 85 cents a barrel.