Price controls Did not work in the 70s for oil, the same happens in every other market that is distorted by Government.
Jack RafuseCHICAGO TRIBUNE
June 7 2007
For those with memories shorter than mine, President Richard M. Nixon imposed wage and price controls on Aug. 15, 1971. Oil and gas were two of many commodities affected. An initial 90-day freeze turned into more than 1,000 days before the controls were dismantled. Inflation -- just above 4 percent in 1971 -- was in double digits when the controls were lifted.
Nixon kept the wage-and-price controls on oil, gasoline and petroleum products in place, as did Presidents Gerald Ford and Jimmy Carter. The results were disastrous. Oil exploration and domestic oil production slowed sharply. And foreign oil poured into the nation's gas tanks, filling the booming demand for price-controlled gas.
A windfall-profits tax compounded all the negative effects, and the shortages lasted until President Ronald Reagan repealed controls in 1981. The price of a gallon of gas at the pump fell by a third over five years.
The Federal Trade Commission has repeatedly cautioned against reverting to this failed policy, warning: "If natural price signals are distorted by price controls, consumers ultimately might be worse off, as gasoline shortages could result."
In the 1970s, we were the only nation on Earth to have gas lines.