Ten Answers that Are Obvious, and False

A FAIRLY RELIABLE test of the truth of any statement about economic issues is the degree to which it contradicts everything you read or hear. To illustrate, let’s explore ten true statements that are widely regarded as obviously false.

1. The gas shortage was deliberate public policy. Even by the original White House estimates, which have proven much too pessimistic, we faced no more than a trivial 7 per cent shortage of’ gasoline before the Energy Office ordered the refineries to cut back on gasoline production. The theory was that distillates (mainly home heating oil and diesel fuel) were more “essential.” But the original figures of the distillate shortage weren’t even close (900,000 barrels a day versus a year-end revision to 340,000 barrels a day), and there is a very narrow range within which refineries are technically able to switch from gasoline to heating oil. By the end of 1973, figures from the American Petroleum Institute showed distillate fuel stocks 30 per cent above the levels of a year before, and gasoline stocks below the “crisis point.” Monthly allocation guaranteed that all stations would run dry at the same time. Basing allocations on 1972 use created surplus supplies in ski resorts and scarcity close to home.

A FAIRLY RELIABLE test of the truth of any statement about economic issues is the degree to which it contradicts everything you read or hear. To illustrate, let’s explore ten true statements that are widely regarded as obviously false.

1. The gas shortage was deliberate public policy. Even by the original White House estimates, which have proven much too pessimistic, we faced no more than a trivial 7 per cent shortage of’ gasoline before the Energy Office ordered the refineries to cut back on gasoline production. The theory was that distillates (mainly home heating oil and diesel fuel) were more “essential.” But the original figures of the distillate shortage weren’t even close (900,000 barrels a day versus a year-end revision to 340,000 barrels a day), and there is a very narrow range within which refineries are technically able to switch from gasoline to heating oil. By the end of 1973, figures from the American Petroleum Institute showed distillate fuel stocks 30 per cent above the levels of a year before, and gasoline stocks below the “crisis point.” Monthly allocation guaranteed that all stations would run dry at the same time. Basing allocations on 1972 use created surplus supplies in ski resorts and scarcity close to home.