How gas price controls sparked '70s shortages

The Washington Times ^ | 5-15-06 | Patrice Hill

[JZelle]

Proposals to control gasoline prices and tax producers' windfall profits were popular ideas that were tried -- without much success -- during the oil shocks of the 1970s and 1980s. The era of price controls is most remembered for long lines at gas stations. The controls were put in place by the Nixon and Ford administrations in reaction to a jump in fuel prices caused by cuts in production by the newly formed international oil cartel, the Organization of Petroleum Exporting Countries.

[JZelle]

Tom Sowell always succinct. He da' man!!

[Shermy]

Sophistry. He softens the embargo, focuses on the reaction to it. Without the reaction the effect would be the same.

Indeed, oil prices were regulated postWWII until about 1970.

[Alberta's Child]

The effect of the oil embargo was minor, since the embargo did nothing to affect the actual supply of oil to the U.S. (it simply added another "middle-man" to the process).

My guess is that the 1973 oil embargo itself would have resulted in about a 20% increase in oil prices here in the U.S.

[dhs12345]

Side note: gas prices dropped again at a later time when Americans started buying compact cars.

[mc6809e]

Sophistry. He softens the embargo, focuses on the reaction to it. Without the reaction the effect would be the same.

Bullcrap.

Domestic suppliers reacted to price controls by producing less oil than they otherwise would have.

That's exactly the sort of thing you want to avoid when other suppliers have pulled back on their production.

Bottom line: price controls are stupid. And only those ignorant of basic economics claim otherwise.

[norraad]

Yes, there never was a shortage.

That can't be stressed enough!

Tankers full of oil laying low in the water stretched over the horizon as far as the eye could see to anyone flying a small plane along the coast.

[feedback doctor]

I remember Frank Reynolds on ABC's World News Tonight saying, "President Reagan guaranteed that gas prices will rise by ending the price controls put into effect during the Carter Administration." The prices dropped right after that by a significant amount. Never heard about a correction on that one.

[capt.P]

I work aboard a US-flagged tanker- my captain said that he sat at anchor at the Southwest Pass anchorage at the Mississippi for 3 weeks with a full load of gas and diesel during the crisis in the 70's- with 50 + other tankers in the anchorage.

BTB- I'm not a conspiracy theorist, but we did the EXACT same thing with 268,000 bbls of gas and diesel in Feb-March. 20 days this time. Along with 15-20 other tankers. Our port agent said that this was a result of less demand for heating oil in the Northeast 'cus of the warm winter- there wasn't any storage space for the bulk of finished products that we had aboard...

PS. After 20 days, we picked up the anchor, and steamed to Houston, where, apparently, there was plenty of capacity. At 40k/day for the ship, that was an expensive boo-boo.