NCPA - National Center for Policy Analysis

Energy Debate Now Focuses On Markets, Not Controls

October 4, 2000

When the first oil crisis burst upon the world more than a quarter decade ago, many U.S. politicians attacked oil company executives and advocated more government controls.

With oil prices once again soaring upward, political reaction is much more muted, observers note. Although a few politicians still dredge up old charges that the oil companies are in collusion to raise prices, they are in a distinct minority and their views receive much less attention than they did in the early 1970s. High gasoline taxes and moves by the Organization of Petroleum Exporting Countries are the focus of today's debate.

  • Analysts point out that reaction to high oil prices today is very different from 1973 -- with public panic and calls for draconian price controls being replaced by diplomatic efforts and more enlightened examination of the market forces involved.
  • There is a greater appreciation today that government controls only worsened supply problems in the 1970s and policy makers now are more inclined to work with market forces rather than fighting them.
  • Experts say the failure of price controls on gasoline, allocation regulations and import quotas caused many Democrats and even some Republicans to rethink their antipathy to market mechanisms.
  • During the Arab oil embargo, imports of crude oil and petroleum products fell more than 20 percent; today, imports are only a bit lower than year-earlier levels.

During the first energy crisis, GOP President Richard Nixon imposed and maintained the most elaborate set of price controls that Americans had ever witnessed at any time other than during war. President Jimmy Carter began the process of lifting controls late in his term. But they were not abolished completely until President Ronald Reagan took action in 1981.

Source: Richard A. Oppel Jr., "Circumventing an Oil Crisis," New York Times, October 4, 2000.

 

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