Newspaper article THE JOURNAL RECORD

Energy Price Control Efforts Have Troubled Past

Newspaper article THE JOURNAL RECORD

Energy Price Control Efforts Have Troubled Past

Article excerpt

Meanwhile, U.S. energy consumption _ gas and oil _ was rapidly on the rise following World War II. Federal oil import controls from 1955 to 1973 had caused higher exploitation of U.S. oil reserves. Thus, U.S.

production peaked by 1970.

In 1968, U.S. gas reserves in the lower 48 states declined for the first time. Thereafter, the situation got worse. During the 1972-73 winter, curtailments even to non-interruptible customers became quite common.

Curtailments continued in the subsequent six winters, with the most drastic in 1976-77.

Across the globe, Arab emirates with vast oil reserves were gathering strength in the world oil market.

Inflation was rampant in the United States.

President Nixon unveiled his "New Economic Program" in 1971, and price and wage controls were set. Although most price controls were eliminated by 1974, other means to control oil prices lasted until abolished in 1981.

President Carter had initiated an end to some price controls by 1979 and all others by 1981. President Reagan actually signed the executive order that brought all oil price controls to an end as his first action as president on Jan. 21, 1981.

In the face of the Arab Oil Embargo that broke out in the spring of 1973, however, Nixon signed the Emergency Petroleum Allocation Act in November that year. Moreover, it was perceived as a vehicle to grant competitive market advantage to small refiners and marketers in light of tightening world oil supplies and higher prices.

Oil prices quadrupled to a now-modest level of about $11 a barrel by early 1974.

Next came the Energy Policy and Conservation Act in 1975, which set a wide, long-term range of regulatory, price control, conservation and emergency measures on more permanent footing.

Along with a reworked oil price control system, a set of petroleum product price controls had been established. Allocations for both oil and petroleum products were fixed as well as a schedule of priorities. In that, there were set-aside programs for state and federal governments.

"Regulators were particularly reluctant to allow price increases on the most visible products gasoline, home heating oil and propane," the petroleum institute analysts observed.

By this time, the Federal Power Commission had adopted a uniform national ceiling for gas prices. It was set at 42 cents per thousand cubic feet for gas sold after Jan. 1, 1973 and raised to 50 cents in 1975.

Shortages continued, though.

After the harsh winter of 1976-77, the Natural Gas Policy Act of 1978 was passed. Federal gas price controls were extended to intrastate markets; some intrastate and all interstate prices were to be decontrolled by Jan.

1, 1985.

Gas prices were allowed to rise gradually, which spawned a great deal of drilling for reserves. However, conservation measures were passed simultaneously, and gas consumption declined after 1973. …

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