Gasoline rationing, allocation and price controls: Analysis of their costs and benefits: Fid-Bau Portal

Gasoline rationing, allocation and price controls: Analysis of their costs and benefits

Difiglio, Carmen

Abstract Gasoline rationing, allocation and price controls are not currently elements of U.S. energy policy. In the event of a future petroleum supply disruption, the current Administration intends to rely on the market instead of allocation and price controls. However, if an emergency did occur, the U.S. Congress would likely consider a return to controls and rationing. This paper analyzes the costs and benefits of allocation and price controls and concludes that their implementation would result in extraordinary economic costs. The economic waste caused by a gasoline shortage would, under certain assumptions, exceed $50 billion per year. Of the several types of gasoline rationing programs discussed in this paper, none would have any likelihood to reduce this waste to an acceptable level. Because of these findings it is recommended that gasoline rationing, allocation and price controls be avoided in favor of a market oriented emergency energy policy.