In the 1970s, when gas was really expensive, why did gas stations have such long lines?

Question

Were people trying to stockpile as much gas as possible? Reason I ask is that it seems like when the prices were going up so high there would be less purchasing taking place. But obviously that wasn't the case.

Thanks for all the quick answers! It seems like I equated the high inflationary rates of the time with the gas shortage, but guess I was mistaken and they were separate issues.

And separate times.

Answer 1

First, it's sad but predictable to see man blaming it all on the oil companies, ignoring the actions of OPEC, foolish U.S. government policies at the time, etc.

Anyway, your instincts are very good --things SHOULD work the way you said, and there should NOT have been those lines at the gas pumps. One of the main reasons there were is government interference in the markeplace, esp.via PRICE CONTROLS (see below).

You are also correct to see a link between 1970s inflation and the issue of oil. The OPEC oil embargo of 1973 had major economic impact, both directly and indirectly on the world economy.

Further , there were a COUPLE of signficant increases of gas prices in the 70s --and once you adjust for inflation you find that they were higher than some here claim. (You cannot simply say "it was under a dollar" as if the dollar was worth the same today as it was 30 years ago!!) The first was a result of the OPEC embargo (as well as responses to it....). The second came in the LATE 70s, peaking in 1981.

Back to your question about SHORTAGES amidst high prices. It's a good question. In fact, 'supply and demand' in a market economy suggests that, when there is a shortage prices WILL go up, which will in turn suppress demand and cause a more efficient allocation of resources. This is NOT "price gouging". I's how capitalism works -- and when not tampered with it works out pretty well.

The problem is that, when this happens, people tend to demand a 'quick fix' and politicians tend to want to please them, so they often do things that hurt the situation.

What the government SHOULD do is find ways to increase the SUPPLY, that is, that make it worthwhile for investors to take the RISKS needed to increase supply -- like easing restrictions, NOT raising taxes or increasing regulations which DISCOURAGE investors from putting money into searching for new sources, etc.

But these, though they work over the longterm, don't provide the overnight relief people want. So instead the governenment may try price controls -- which DECREASE the supply (since there's no incentive to invest when the chance of LOSING money becomes very high) -- and they did. They may decide to put a "windfall profit tax" on companies, which once again is a DIS-incentive to investing and ends up suppressing the supply.

So, guess what! --, when the U.S. government tried price controls, gas companies who found they would LOSE money by selling at that price, withdrew their 'old oil' from the market, causing. . .a SHORTAGE at the pumps! That is, the government refused to let the marketplace work these things out, and the results were exactly what any competent economist could tell you. (Price controls have OFTEN been attractive --and may be very nice for some, even seemingly helpful to many for a time-- but in the long term they ALWAYS fail.)

Answer 2

My father worked for a major oil company then. It was always his belief those "shortages" were staged by big oil.

Face it, our country is hooked on oil. Even when gas is $5 a gallon, they'll be there filling up their SUVs just like they do when gas is cheap.

You'd think people would discontinue unecessary trips, but it doesn't seem that is the case.

Supply and demand. I wonder what would happen if people simply didn't drive as much. Would the prices drop then? I think they would.

How can oil companies continue to rake in multi-billion dollar profits each year and keep telling us the prices are high because oil is growing more and more expensive?

If E-85 is mostly ethanol, why is that still almost the same price as regular unleaded?

Oil companies are just as crooked as any other big business I guess.

Answer 3

Due to the increased prices of oil, gas companies were importing less gas. The gas stations, therefore, could not give gas stations enough fuel to support customers 24/7. To compensate, the gas stations drastically reduced their business hours to only a few hours a day. That created a funnel effect... the same amount of people trying to pump their gas with decreased time to do so. The lines backed up like crazy because of that.

Answer 4

There was a shortage of gas and stations were supplied on a rotation basis. You had to get gasoline when you could because it was possible that it would be a while before any station in your area would get some again. The shortage was what kicked in the off-shore drilling in this country so that we would not be so beholden to the middle east for oil supplies (OPEC cut their production on purpose to hold the rest of the world to ransom). We now import less than 20% of our oil, but we need to start drilling again and to build more refineries further inland so that weather disasters don't impact us so much in the future.

Answer 5

It was a gas shortage and the stations could not get anything to sell. Prices were relitively high for that time period because supply was low. And when a station did get a shipment of gas people would line up to get it before they ran out.

Answer 6

In 1972-73 Gas was not at all expensive..By today's standard anyhow... It averaged between 57-60 cents a gallon.. The problem was the shortage of gas.. There was not an abundance and everyone needed it.. the lines were for people who were "allowed" to get gas that day.. It would depend on your license plate number ending in odd or even numbers... and you were forced to wait in a line to get your 5 gallon maximum of gas...

Answer 7

People heard that gas would not be available, so they stockpiled it in their tanks.

Then of course the gas stations did not have it and it became a reality. So now other people got in lines to make sure they could get their fair share.

Same thing happened with the toilet paper in the U.S.A. And one time when I was living in Tehran, Iran it happened with onions.

So go ahead and stockpile the products that you cannot live without, start a rumor and see if you know enough people to make it happen.

Answer 8

It wasn't really expensive. There was a "shortage" caused by trouble in the Middle East. There was rationing -- you could buy gas only on certain days of the month depending on your license plate, so, when your day came around, you went and filled up your tank.

Answer 9

There were less people then, and less demand. Then there was a cut off of fuel all together and people were wiping the feul stations out completely. The long lines were a direct result of the shortage.

Answer 10

People started believing that there was a gas shortage. The rumors grew, and the public wanted to get (and store) as much of it as they could.