A Free-Market Energy Blog

Ronald Reagan: Executive Order Providing for the Decontrol of Crude Oil and Refined Petroleum Products (January 1981 for January 2017)

By Robert Bradley Jr. -- January 12, 2017

“Fears that the planned phaseout of controls would not be carried out, for political reasons, have also hampered production. Ending these controls now will erase this uncertainty.”

– Ronald Reagan, “Statement on Signing Executive Order 12287, Providing for the Decontrol of Crude Oil and Refined Petroleum Products” (January 28, 1981)

I am ordering, effective immediately, the elimination of remaining Federal controls on U.S. oil production and marketing.

For more than 9 years, restrictive price controls have held U.S. oil production below its potential, artificially boosted energy consumption, aggravated our balance of payments problems, and stifled technological breakthroughs. Price controls have also made us more energy-dependent on the OPEC nations, a development that has jeopardized our economic security and undermined price stability at home.

Fears that the planned phaseout of controls would not be carried out, for political reasons, have also hampered production. Ending these controls now will erase this uncertainty.

This step will also stimulate energy conservation. At the same time, the elimination of price controls will end the entitlements system, which has been in reality a subsidy for the importation of foreign oil.

This order also ends the gasoline allocation regulations which the Departments of Energy and Justice cite as important causes of the gas lines and shortages which have plagued American consumers on and off since 1974.

In order to provide for the orderly termination of petroleum controls, certain minor provisions of the current regulatory program will not end until March 31, 1981.

Ending price controls is a positive first step towards a balanced energy program, a program free of arbitrary and counter-productive constraints, one designed to promote prudent conservation and vigorous domestic production.

2 Comments


  1. JavelinaTex  

    A very great day. His first action as President.

    I still recall Bill Moyer’s rant on CBS of how it was a payoff to Big Oil.

    Funny thing was there was a very short and slight run up in gasoline prices (maybe 10%?). Nothing like had been hypothesized (critics were talking of a doubling) and they very quickly proceeded to drop. Further, spot crude prices on the world market tanked and the Saudis had to start cutting production to even maintain their posted price which was way below spot prices ($6 to $9 bbl IIRC)

    Econ 101 was that price controls on domestic oil served to subsidize imported oil costs and the US consumers of oil products were pretty much paying a market clearing price (de-reg) for refined products. Thus higher domestic prices basically reduced world oil prices. And the Germans (Helmut Schmidt) were long upset about about domestic US price controls; IMO it basically bid up the cost of oil for everyone else (who didn’t have large domestic supplies).

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  2. hunter  

    It would be good to see this reminder of how an EO, done right, can help advance American national interests. And to show our friends on the left who are a wee bit deranged that we have seen them in this condition before and that if they will avoid a coup or assassination things will turn out ok.

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