Over at my regular “Energy Fact of the Week” feature on American.com, I look at the relationship between the price of gold and the price of oil, and come to no firm conclusion about how much of the price volatility of oil can be attributed to a weak dollar. But along the way I thought that it is worth reminding people of what Democrats said about Reagan’s decontrol of oil price in 1981. (Also, Investor’s Business Daily gives me a nice shout out on this point, so why not share the love with Power Line readers?)
One of Reagan’s first acts upon entering office was to complete the decontrol of oil prices begun tentatively by Jimmy Carter. Liberals seemed to compete with each other for the most risible expression of economic illiteracy in response. In the annals of public policy prognostication it is difficult to find such a wide assembly of wrongheadedness. Sen. Howard Metzenbaum of Ohio said took to the Senate floor the day after to predict that “we will see $1.50 gas this spring, and maybe before. And it is just a matter of time until the oil companies and their associates, the OPEC nations, will be driving gasoline pump prices up to $2 a gallon.” Sen. Don Riegle of Michigan said that “It will hurt our people within a matter of days.” Sen. Dale Bumpers of Arkansas had previously predicted that “without rationing, gasoline will soon go to $3 a gallon,” and added that “Decontrol is designed to see how much we can squeeze out of the American people before they take to the streets.” Maine’s Sen. George Mitchell said “Every citizen and every family will find their living standards reduced by this decision.” Democratic Congressman Ed Markey said “I believe that decontrol as a cure will prove to be worse than the disease of oil addiction.” A Naderite advocacy group predicted that oil prices might go as high as $870 a barrel “under assumptions which many experts believe are realistic.” Instead oil prices started falling almost immediately; gasoline pump prices fell from an average high of $1.41 in February 1981 to a national average of 89 cents a gallon in the spring of 1986.
Worth keeping in mind when liberals today say increased domestic production will make little difference to oil markets, as well as prattling on about “speculators.” As if we really needed any more evidence that liberals do not get markets, and are inherently hostile to the private sector.