Bryan Caplan  

Was Jimmy Carter Elected President of Iraq?

Privatize Lenin!... Carter's Policies Not Just in ...

I just caught a story on Cap'n Arbyte that has to be read to be believed:

Gasoline price controls in Iraq are responsible for retail gasoline shortages and a withering decline in refining capacity.
BAGHDAD, Iraq (Reuters) — The country with the world's third largest oil reserves should not run out of fuel.

But Iraq has come perilously close to doing just that. To save fuel, and to general confusion, the government has ordered half the capital's car fleet off the roads on any given day.

Tuesday was the first day of the new rule, and only cars with licence plates ending in an odd number could take to the streets.

Widespread gasoline shortages have led to rationing. This is the predictable effect of price controls. Price controls prevent markets from clearing, creating shortages or gluts. The gasoline price caps in Iraq have created shortages because when a product is nearly free, people will attempt to buy more of it.

[The rationing] owes to years of under-investment in Iraq's creaking oil refining and distribution sectors, which have left the 2.5 million barrel per day producer unable to meet its domestic demand for gasoline and other essential oil products.

I haven't been following Iraqi politics too closely, but the only explanation I could come up with is that Shiites, Sunnis, and Kurds compromised by electing a born-again Christian from Georgia to be their leader.

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COMMENTS (8 to date)
John Thacker writes:

It's a bizarre but frightenly common economic mistake-- the people of Iraq believe that since they have all this oil, then oil should be cheap for them, rather than be at the world price. People in the US suffer from this delusion at times, too, worrying too much about certain countries profiting by "controlling" supplies of commodities.

The price caps (and subsidies) actually have been in place for a long time. However, demand has soared since the war for all sorts of goods with the easing of sanctions. (Similar problems occurred with electric power, although they've managed to deal with that a little better by getting more capacity online, though it's not easy by any means.)

We actually suggested raising the price caps or lifting them completely, but the Iraqis rejected that idea.

spencer writes:

Jimmy Carter did not impose energy price controls.
They were imposed by Nixon.

Carter actually removed them. No, it was not a 100% lifting at one time. It was a staged lifting. But, by the time he left office he had removed most of them. On a percent basis, Carter lifted more price controls then Reagan did.

You can get the data at DoE.

P.S. There were no gas line uder Carter either, they were under Nixon.

Ian Lewis writes:

Hey Bryan,
I am not trying to change the subject, but is Jimmy Carter a Born Again Christian? I know that he was raised in the Southern Baptist Church and not too long ago (2 years ago?) he left that church because of their changing attitude towards women, but I don't believe that he is Born Again.

Emma writes:

"People in the US suffer from this delusion at times, too, worrying too much about certain countries profiting by "controlling" supplies of commodities."

I think you're too kind. It really hits home how ignorant people are about economics when things like soaring gas prices occur.

-Gas lines occurred under both Nixon and Carter. I would like to see somebody who was at least alive then to explain in detail what happend in the '70's.

-Southern Baptists, at least all the ones I've ever known, consider themselves "Born Again". There is a passage in the Bible about one must be "born again" and many extrovert, or evangelical, Christians take it very seriously and look very unfavorably upon infant baptism.

Chris Bolts writes:

Actually, Carter imposed the Windfall Profits Tax, which only exacerbated the gas shortages of the 70s.

As far as Iraq is concerned, it's sad that the world's third largest oil producer is suffering from gas shortages. Just think that if gas market was deregulated it could have a drastic effect upon the number of car bombs being implemented in Iraq.

spencer writes:

Carter's windfall profits tax was enacted on
2 April, 1980.

In April, 1980 the price of west texas intermediate was $39.50 per barrel.

That was the all time high for crude oil until last year.

Now, Cris would you explain how the windfall profits tax that was enacted in 1980 exacerbated the gas shortages of the 1970s.

John Whitehead writes:

When in doubt, dump on Jimmy Carter?

Chris Bolts writes:

Well, I did say "exacerbated the gas shortages of the 70s" not "exarcerbated the gas shortages during the 70s". In other words, because of the WPT legislation that Carter had signed it prolonged the gas shortages instead of curtailing them.

Semantics, yes, but oh well. :-)

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