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Gasoline Prices Spur Talk of Regulation and Price Controls

By Joe Benton
ConsumerAffairs.com

August 29, 2005
Ever-rising gasoline prices have politicians thinking and talking about whether gas prices should be regulated.

The Public Utilities Commission in Hawaii has imposed a cap on the price of gasoline, the first state in the nation to do so.

The debate over possible regulation has come up in five other states. Politicians in Michigan, Oregon, California, New York and Connecticut have publicly debated and talked about price regulation.

Many economists warn that prices caps and regulations could actually send gas prices higher.

Federal investigations claim to a have pored over oil industry documents and transactions in search of illegal behavior. So far they have been unable to find any evidence of price fixing.

The Service Station Dealers of America complain that wholesalers are limiting competition and thus pushing prices higher. They contend that gasoline is a commodity many consumers depend upon and as such ought to be regulated.

The American Petroleum Institute, on the other hand, says regulating prices would be a disaster. API represents the oil and natural gas industry.

The U.S. embraced price regulations following the 1972 Arab Oil Embargo. President Richard Nixon ordered the controls for on oil and gasoline that remained in force until 1981. The price controls were blamed for volatile prices, shortages and long lines at gas pumps.

With gasoline prices now approaching historic record levels, the debate is beginning anew. The previous record high for gasoline occurred in 1981 when gas prices are adjusted for inflation.

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