A Short History of Gasoline Price Controls
By David Henderson
In the Weekend Interview in today’s Wall Street Journal (WSJ editor Rob Pollock interviews George Shultz), Shultz says the following:
And one thing you know from experience is when you control the price of something, you end up getting less of it. So if you control the price of health-care providers, you will have fewer of them and that’s gonna wind up as a crisis. The most vivid expression of that . . . was Jimmy Carter’s gas lines.
There’s nothing incorrect about this statement. But it gives the reader the impression that Jimmy Carter was the president who introduced price controls. Shultz knows better. It was his boss, Richard Nixon, who introduced price controls on everything and kept them on gasoline. Shultz, as Secretary of the Treasury at the time, was intimately involved with the details. It’s true that Carter kept the controls and didn’t try to get rid of them until early 1980, when he made a compromise with Congress–giving them their “windfall profits tax” on oil, which was really a graduated excise tax on oil, in return for phasing out the controls. But Nixon is the one who imposed them. So there were “Richard Nixon’s gas lines” just as there were “Jimmy Carter’s gas lines.”
You could dismiss Shultz’s line as simply a selective partisan dig, which is what it was. But I point this out because I have read over the years so many people blame Carter for price controls on gasoline as if Carter initiated them. Nixon started them, Ford kept them and made them worse with the so-called “entitlement program,” and Carter kept them. And, as noted above, Carter at least did try to get rid of them. Reagan finished the job within his first month in office.