Why the Government Should Mandate Gas Prices

406 Words2 Pages
11.20.14 In the 1970’s OAPEC (Organization of Arab Petroleum Exporting Countries) established an oil embargo that caused gas prices to rise from $3.00 to up to $12.00 a barrel. Due to this drastic increase, the government, under President Jimmy Carter administration, set price controls on the price of gasoline. This not only lead to higher gas prices, but caused a rationing of gas, which lead to extremely long waits at the gas pump. To remedy the long lines, consumers where assigned a day to purchase gas, based on their odd or even numbers license plates. This instability of the supply of gas was known as the “Gas Crisis “or “Gas Shock” of 1973. The “Gas Shock” of 1973 prohibited oil companies to raise their prices in order to cover the cost of crude oil to be refined. This caused many gas stations to go out of business and caused the price of gas to go even higher. In the 1970’s the gas crises lead to violence at the gas pump, many protests and trucker striking due to high prices and limited supply of gasoline. Setting a price for gas today, would lead to the same effects whether the price is set higher than the equilibrium or lower. Setting the gas price higher would cause people to buy less of it because it will be less affordable to some. Supply for gas will increase as there will be less demand and this will cause a surplus. The market won’t be selling enough gas and gas stations will go out of business. Setting the gas price to a low price would cause a shortage. People will try to buy more of it and there will be more demand than there is supply. To try to keep control, producers would offer less amounts of gas that customers could buy and people will still be in a struggle to get their gas. So even though most people believe having a low price on gas would be a good thing, it wouldn’t be as beneficial as we think. Because of the way it is
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