PRINCETON, NJ -- When Americans are asked what steps should be taken to reduce gas prices, no consensus appears, but somewhat surprisingly, a majority favor imposing price controls, by a 53% to 45% margin. Americans also support releasing supplies from the federal government's strategic petroleum reserve (58%) and drilling in U.S. coastal and wilderness areas now off limits (57%). On the other hand, a majority oppose rationing gasoline (79%), re-instituting the 55 mph speed limit (56%), and suspending the federal tax on gasoline for the summer (52%).
Oil Companies as the "Villains"
Last week, the Congress called oil company executives to testify on Capitol Hill and then berated them about surging gas prices and their companies' record profits. While such actions might have a positive "jawboning" effect at best, they no doubt reflect the lawmakers' sense of Americans' growing frustration over increasing gas prices at the pump.
Ironically, the intensity with which Americans see oil companies as "gas price villains" may be fading a little, according to opinions respondents volunteered in a new Gallup Poll, conducted May 19-21. Over the past year, the percentage of Americans blaming the oil companies for skyrocketing gas prices fell from 34% to 20%; the percentage pointing to oil refinery problems fell from 16% to 9%; and those attributing the increase in prices to problems in the Middle East and the Iraq war fell from 13% to 8%. On the other hand, the percentage of Americans suggesting prices are increasing as a result of the economic forces of supply and demand increased from 10% to 15%, while 6% now point to speculators and 4% to the shrinking value of the dollar and the poor U.S. economy -- both new reasons not even mentioned a year ago. More Americans also mention crude oil prices, the shortage of oil supplies, and U.S. dependency on foreign oil.
As gas prices continue to increase, the financial hardship they create not only affects more people but also increases the severity of hardship felt by those who can least afford it. While the continuing surge in oil and gas prices has some basis in reality because of the limited supply and the increasing demand in such emerging countries as China and India, Congress also heard testimony last week explaining some of the ways these markets are being affected, and possibly manipulated, by new financial and speculative forces.
This makes for an explosive brew in an election year. Frustrated by political deadlock and inaction, Americans are beginning to consider some more drastic efforts to control the surge in gas prices at the pump. For example, a majority of Americans now support drilling in U.S. coastal and wilderness areas. But the favorable margin of 57% to 41% doesn't seem like enough of a consensus to break the energy policy deadlock in Congress.
More significantly -- and worrisome from an economic perspective -- a majority of Americans now support instituting controls on gas prices at the pump. While the favorable margin of 53% to 45% doesn't presage immediate, or even eventual, political action, it does suggest that record gas prices may be reaching a tipping point where Americans are willing to have the government intervene in the marketplace with the hope of providing some significant price relief at the pump.
While price controls may seem like a simple solution, economically, they simply don't work over time. Right now, gas in the United States is being rationed -- and supply and demand balanced -- by price. In fact, significant "demand destruction" is taking place as Americans are driving less. What price controls do is artificially hold down gas prices, preventing a further decline in the demand for gas while simultaneously reducing the incentive for companies to produce more.
Economic analysis suggests that the almost inevitable result of gas price controls would be gas rationing -- and no one who knows the history of the gas lines of the 1970s wants a recurrence. For that matter, Americans oppose the idea of gas rationing by a 79% to 20% margin.
While Gallup's new poll results suggest that the link between price controls and rationing might be a good and effective argument against the imposition of price controls on gas, Americans' dissatisfaction with record gas prices may be reaching a tipping point where emotions may well supersede logic. That is how wage and price controls became law in the United States in the 1970s. Unless something is done to stop the hemorrhaging at the gas pump, it seems Americans and their political representatives might end up supporting some radical government interventions in the marketplace this election year in the hope they will provide at least some short-term relief at the pump.
Results for this Gallup Panel study are based on telephone interviews with 1,013 national adults, aged 18 and older, conducted May 19-21, 2008. Gallup Panel members are recruited through random selection methods. The panel is weighted so that it is demographically representative of the U.S. adult population. For results based on this sample, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
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