Milton Friedman on Energy and oil
It is a mark of how far we have gone on the road to serfdom that governmental allocation and rationing of oil is the automatic response to the oil crisis. This will not prevent higher prices, which will in fact do the job—but you may be sure that the rationing authorities will take the credit.
Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. The column’s closing paragraph.
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Milton Friedman, “Why Some Prices Should Rise” (Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, 1973), Congressional Record, November 29, 1973, p. 38775. https://miltonfriedman.org/quotes/road-to-serfdom-rationing-authorities-take-credit-1973
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Is rationing the solution? Far from it. It is the problem. We already have rationing of producers and distributors. Coupon rationing of final consumers would simply be the hair of the dog that bit you.
Context. From a Newsweek column of March 4, 1974, written in Chicago during the gasoline lines of early 1974, after the Arab oil embargo and under the price and allocation controls administered by the Federal Energy Office, headed by William E. Simon.
FEO and the Gas LinesColumn, 1974, Newsweek, March 4, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, pp. 4559 to 4560, introduced by Representative John H. Rousselot of California, who gives it as the column of “Newsweek columnist, Dr. Milton Friedman, in the March 4, 1974, issue”; reprinted again in Extensions of Remarks, April 30, 1974, p. 12454, by Representative Steven D. Symms, from The Freeman (Foundation for Economic Education), Congressional Record, February 27, 1974, p. 4560The most effective way to cut consumption and encourage production is simply to let the prices of oil products rise to whatever level it takes to clear the market. The higher prices would give each of the 210 million residents of the U.S. a direct incentive to economize on oil, to find substitutes for oil, to increase the supply of oil.
Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. Later in the column he adds that what is called for is higher prices for oil products “relative to other products—not general inflation.”
Why Some Prices Should RiseColumn, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775Checked against the sourceRead the originalThe current oil crisis has not been produced by the oil companies. It is a result of governmental mismanagement exacerbated by the Mideast war. The price of natural gas at the wellhead has been held down for years by government edict. Since Aug. 15, 1971, the price of retail gasoline and of fuel oil has been held down by the successive phases. The result has been to encourage consumption and discourage both current production and the expansion of capacity. It took the Mideast war to bring these evil effects of price-fixing to a boil.
Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. “The successive phases” are the phases of the Nixon price controls that followed the 1971 freeze.
Why Some Prices Should RiseColumn, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775Checked against the sourceRead the original
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