Effects in Washington, D.C., Area of 1979 Gasoline Shortage:
Supplies Less Than National Average; Price Increases Comparable
EMD-80-70: Published: Jun 24, 1980. Publicly Released: Jun 24, 1980.
- Full Report:
During the 1979 gasoline shortage, Washington, D.C., metropolitan area motorists had to sit in lines at service stations and were forced to change their driving habits. Other locations across the Nation, however, had less severe gasoline supply problems. Consequently, a review was requested to determine the causes of the 1979 gasoline shortage in Washington, D.C., the levels in the marketing system where price increases occurred, and the effectiveness of the Department of Energy's (DOE) response to the situation.
In its review, GAO found that during the first 7 months of 1979, the Washington, D.C., area received proportionately less gasoline than the Nation as a whole. The principal reason for this difference was that the Washington, D.C., area suppliers had less gasoline available for delivery than the national average for all suppliers. Additionally, GAO found that the Washington, D.C., area suburbs did not always receive a proportionate amount of State set-aside supplies. DOE and the oil companies have the authority to transfer specific amounts of gasoline from one area to another to correct regional supply imbalances. However, neither of these entities exercised this authority to address the Washington, D.C., area shortage. Nor has DOE developed overall criteria and guidelines to determine when an area has a supply imbalance which requires the expeditious use of DOE authority. Further, GAO found that the principal cause of increased retail gasoline prices in the Washington, D.C., area during March through July 1979 was refiners' prices. Most of this increase can be attributed to the companies' cost of crude oil, which went up an average of 12.6 cents a gallon during this period. Despite these increases, average prices of gasoline in the Washington, D.C., area during July 1979 were less than the national average price. Also, it appears that some of the costs which were allowed to be passed through by the DOE gasoline tilt rule were put in the refiners' cost banks. Thus, the objectives of the tilt rule were not met.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of Energy should: establish appropriate criteria and guidelines so that DOE can expeditiously use its discretionary authority to direct companies to shift supplies to areas where supply imbalances occur in future shortage situations; work with State and local government agencies to identify areas experiencing supply imbalances; determine exactly how the gasoline tilt rule has been working, with specific emphasis on the rule's stated objectives; determine whether the tilt rule has caused the significant increase in gasoline cost banks; and determine whether revisions to the tilt rule are needed.