A comprehensive analysis of the interrelationships between price controls, oil production technology, product demand, tariff policy, and world trade, as applied to the petroleum industry. A brief history of petroleum industry price controls provides institutional and technical background for the analysis. Price controls, recently extended until 1979, were intended to combat higher prices for refined products, even at the cost of increasing U.S. dependence on foreign oil. While the authors concur that the extension of controls increased U.S. dependence, they show that prices of refined products have not been affected by the controls. Rather, the controls redistributed as much as $5-6 billion annually among crude oil producers and refiners. The issue of total decontrol of the petroleum industry is, in effect, a political contest between those who support reduced dependence on foreign oil and those who benefit from the transfers.
This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.
This research in the public interest was supported by RAND, using discretionary funds made possible by the generosity of RAND's donors, the fees earned on client-funded research, and independent research and development (IR&D) funds provided by the Department of Defense.
Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.