A summary of the United States 1980 Oil Rationing Plan

[ I am convinced by “Any Way You Slice It: The Past, Present, and Future of Rationing” by Stan Cox that rationing will occur.  Whether it will be anything like the 1980 plan remains to be seen.

In the 1980 plan, drivers could sell unused ration coupons. It was estimated they’d sell for $1.60 (gasoline was $1.10), so those who could afford it would pay $2.70/gallon (equal to $7 now).  But oil outside the Middle East was found and for the next 25 years people forgot that this is a finite resource (and have again during the brief shale oil “fracking” boom).

In 1984 the Department of Energy shredded 4.8 billion ration coupons stockpiled during the Nixon administration.  Now we consume 47% more gas in America, with an average consumption rate 10% higher per person than in 1980 (Cox).

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation, 2015, Springer]

USDOE. June 1980. Standby Gasoline Rationing Plan. U.S. Department of Energy Economic Regulatory Administration, Office of Regulations and Emergency Planning. 129 pages  

Excerpts:

This report details how gasoline would be rationed, the way allotments will be distributed, how to allocate rations to private individuals, what share motorcycles/mopeds will get, hardship needs, etc.

Agriculture will receive what it needs from the outset, what remains afterward will be divided on a state-by-state basis.  Ration coupons that have not been redeemed will be freely transferable.

Supplemental allotments will be issued for certain priority activities, such as national security, agriculture, law enforcement, fire fighting, United States Postal Service, emergency medical services, public passenger transportation, sanitation services, search and rescue, snow removal, telecommunications services, gas and electric utilities service, newspaper distribution, energy production activities, vehicle rentals and firms engaged in for hire mail and small parcel transportation and delivery.

Allocation of coupons to individuals

570.24 Limitation on Distribution of Ration Rights. One of the recurring comments on the issue of whether ration coupons should be allotted to licensed drivers or registered vehicles was that the per vehicle system disproportionately favors persons who already own more cars or who can afford to purchase additional cars. Another popular comment was that people will buy several “junkers” in order to receive extra ration rights.

In response to these comments, DOE has incorporated a new § 570.24 in the final regulations which provides authority to limit the number of allotments distributed to any person or household. As a matter of policy, it is desirable to impose a reasonable limit on the total number of allotments given to persons or households that have several registered vehicles, not all of which are used intensively. DOE has not yet arrived at a practical mechanism that would accomplish that objective, so the plan does not provide for any specific limitation. During pre-implementation, however, an equitable and enforceable means of imposing a limitation on allotments will be developed.

Many comments urged that motorcycles and mopeds be provided with the same allotments as passenger cars to reward use of the more fuel efficient two-wheeled vehicles. We have not been persuaded by this argument. First, many people may be tempted by such a proposal to buy a relatively inexpensive moped to receive an extra allotment of coupons for their car. Second, owners of motorcycles and mopeds would not benefit by being able to drive more because of their increased allotments. Our analysis shows that allotments for motorcycles and mopeds which are in amounts less then allotments for automobiles still would allow the more fuel efficient motorcycles and mopeds to be driven significantly more than the average mileage for such vehicles. Therefore, full allotments more likely would result in only a monetary windfall since the excess coupons would be sold on the exchange market. Motorcycles and mopeds therefore will receive an allotment index less than 1.0.

In the comments section, you’ll see that people representing groups such as marinas, telecommunications, rental car companies, Alaskan residents, etc., asked for special allotments. Businesses argued they should get more coupons, since individuals can cut back their discretionary driving.

Diesel-powered vehicles also will not receive an allotment index, as diesel fuel will not be subject to rationing under this plan.

The plan provides that eligibility for ration allotments will be determined primarily on the basis of motor vehicle registrations, taking into account historical differences in the use of gasoline among States. The regulations also provide authority for supplemental allotments to firms so that their allotment will equal a specified percentage of gasoline use during a base period. A priority classification, including, for example, national security, newspaper distribution, rental vehicles, agriculture and for hire mail and small parcel transportation and delivery, is established to assure adequate gasoline supplies for designated essential services.

Ration rights are required by the regulations to be provided by end-users to their suppliers for each gallon sold, and suppliers must provide “redeemed” (cancelled) ration rights to their suppliers on a gallon-for-gallon basis in order to be re-supplied. Ration rights are freely transferable. A ration banking system is created to facilitate transfers of ration rights and redeemed ration rights. Each State will be provided with a reserve of ration rights to provide for hardship needs and to alleviate inequities. A small national reserve also is established to meet emergency needs and other national purposes.

Development of any end-user gasoline rationing plan necessitates difficult tradeoffs between equitably meeting the diverse needs of millions of gasoline users and creating a program capable of rapid implementation with limited administrative complexity. Although the rationing plan, if fully implemented, would be costly and administratively complex, options have been incorporated into the plan to provide, to the maximum extent practical, equity among gasoline users though out the Nation and to provide flexibility to minimize disparities within States.

Any gasoline rationing plan will inconvenience large numbers of gasoline users and will cause hardships to many persons. But in times of serious shortage, gasoline rationing would assure access to some gasoline by all motorists (particularly priority users) and would also help to eliminate waiting lines, stabilize the market for gasoline, and mitigate the economic dislocations caused by a severe petroleum shortage.

The hostage situation in Tehran and the recent Soviet invasion of Afghanistan have continued to provoke further turmoil and unrest in the Middle East, an area which supplies over 60 percent of the petroleum consumed by the Western industrial nations. The beginning of the 1980’s, therefore, is characterized by insecure foreign sources of petroleum and a potential threat of gasoline shortages, underscoring the need for the government to have in place a Standby Gasoline Rationing Plan as soon as possible so as to be prepared to manage a severe gasoline shortfall.

EPCA sec. 201(d) defines a severe energy supply interruption as a national energy supply shortage which the President determines has resulted or is likely to result in a 20 percent shortfall, with respect to projected normal demand, of gasoline and middle distillate fuels for a period of at least 30 days. The shortfall must be one which is not manageable under other energy emergency authorities, is expected to persist for a substantial period of time and is expected to have a major adverse impact on national health or safety or the national economy. An international energy program obligation must have comparable impacts. The President must notify the Congress of his finding together with a request to implement rationing.

For each ration period, DOE will project the national total available supply of gasoline. This amount will determine the total number of ration rights that will be made available. These ration rights will be distributed generally as follows:

(1)   A small percentage of these rights will be reserved for distribution for a National Ration Reserve.

(2)   The total number of ration rights to be distributed to classes of end-users within each State will be determined on a State-by-State basis that takes into account historical use of gasoline by those classes in that State. With the exception of agriculture, allotments for firms and priority activities in each State will be taken from that State’s share of total allotments. Agriculture priority allotments will be distributed before distributions are made to individual States to avoid distortions that might otherwise be caused to other classes of end-users because of the size of this priority category. Under this procedure, each class of end-user in one State would share any shortfall equally (as measured against historical use) with the corresponding class of end-user in other States.

(3)   A percentage of each State’s ration rights will be reserved for a State Ration Reserve, from which the State will make distribution to meet hardship needs.

(4)   DOE will provide allotments to firms and priority class activities on the basis of their historical use of gasoline.

(5)   In each State, the remaining ration allotments will be distributed to all other registrants, eligible individuals and other persons entitled to allotments on a per vehicle basis.

Entitlements for Ration Allotments

  1. Eligibility for ration allotments will be primarily on the basis of motor vehicle registration. However, DOE will implement a system by which such allotments will be supplemented for all business firms and priority users based upon their historical use of gasoline. Persons (whether individuals or firms) with the most recent valid vehicle registration for an eligible vehicle will receive ration allotments. Authority is provided for a limit to be imposed on the number of ration rights distributed to any person or household. Provisions will be made for the expeditious transfer of eligibility for ration allotments when a vehicle is transferred. Provisions also will be made to enable purchasers of new cars to obtain ration rights on an expedited basis.
  2. All vehicles, except motorcycles and mopeds, will receive the same allotment. Motorcycles will receive one-fourth of the allotment for other vehicles, and mopeds will receive one-tenth of an allotment. Firms will receive the same per vehicle allotments but will be able to supplement them with additional allotments to reflect their historical usage of gasoline.
  3. DOE will issue supplemental allotments for certain priority activities, such as national security, agriculture, law enforcement, fire fighting, United States Postal Service, emergency medical services, public passenger transportation, sanitation services, search and rescue, snow removal, telecommunications services, gas and electric utilities service, newspaper distribution, energy production activities, vehicle rentals and firms engaged in for hire mail and small parcel transportation and delivery.

G. The Ration Rights Market

  1. Ration coupons that have not been redeemed will be freely transferable. DOE does not intend to regulate the ration rights market directly, but the final plan reserves the right to do so, if in DOE’s judgment such regulation becomes necessary to prevent abuses.
  2. In order to facilitate the establishment of a market for ration coupons, DOE has the authority under the regulations to sell some ration rights to the public, provided such sale does not cause the total number of issued ration rights to exceed the total amount of gasoline available. In addition DOE can authorize the States to sell ration rights from the State Ration Reserves (see below). DOE also is authorized, to the extent appropriations are available, to buy and sell coupons whenever necessary to equilibrate the number of issued ration rights with the actual supply of gasoline.

H. National Ration Reserve

A percentage of the total ration rights issued will be reserved for the establishment of a National Ration Reserve. The National Ration Reserve will be used to meet national disaster relief needs and other national emergencies, to provide allotments to Canadian and Mexican firms that drive vehicles across the border for the purpose of conducting business in the United States, and for such other purposes as DOE finds necessary.

I. States’ Role in Gasoline Rationing 1. A percentage of the ration rights to be issued within each State will be reserved for distribution to that State as a State Ration Reserve, to be used by the State primarily for the relief of hardship. The States will have broad discretion and flexibility in the administration of the State Ration Reserves but will be required to submit to DOE a plan describing how the State Ration Reserve will be administered before receiving the ration rights. DOE can authorize the States to sell to the public a portion of the State Ration Reserve in order to facilitate the establishment of a market for ration coupons.

The definition of “emergency services” has been expanded to include search and rescue activities and utilities services. These activities too will be entitled to receive supplemental allotments of ration rights as priority class firms.

It should be noted that this plan deals only with the rationing of gasoline. Gasohol, which typically is a blend of 90 percent unleaded gasoline and 10 percent ethyl alcohol, will be subject to rationing only to the extent of its gasoline content. Therefore, the purchase of a 90/10 blend of gasohol will require only nine-tenths as many ration rights as the purchase of the same volume of pure gasoline.

The focus of this issue is gasoline use for agriculture, a priority activity, which constitutes a significant portion of gasoline use in some States. By way of illustration, during certain calendar quarters gasoline consumption for farming in several farm States ranges from 15 to 50 percent of total consumption. Additional amounts of gasoline are used in these States for distribution and processing of agricultural products. In other jurisdictions, gasoline use for agriculture is much less significant. If, as proposed in the notice of proposed rulemaking, the supplemental allotments for agriculture were deducted from each State’s distribution of the total available ration rights, and assuming that the agriculture priority class is provided 90 percent of its base period gasoline use, then in a 20 percent shortfall the average non-farm motorist in a State with 50 percent base period agricultural use would receive about 68 percent of his base period use. This is to be compared with 78 percent of base period use for the average motorist in a State where agriculture consumed only 10 percent of the base period supply of gasoline.

In order to cure this disparity and assure that the average motorist class of end-user in a State with substantial gasoline use for agriculture does not suffer a disproportionate burden of the shortfall, we have made an adjustment to the calculation formula. Under this adjustment, supplemental allotments for the agriculture priority are taken from the national supply of ration rights before calculating each State’s allotment, rather than being taken from each State’s allotment. The effect is that agriculture receives exactly the same amount as it would have had its ration rights been taken from the State’s allotment, but the ordinary motorist class of end-user will not suffer a disproportionate burden in a highly agricultural State. Such an adjustment is not necessary with respect to other priorities because there is no evidence that gasoline usage by any other priority class of end-user will dis-proportionately affect in any material way the gasoline available to the ordinary motorist class of end-user. Thus, under the plan, each class of end-user within a State will share the shortfall equally (as measured against historical use) with the corresponding class of end-user in other States.

Many people who commented urged that motorcycles and mopeds be provided with the same allotments as passenger cars to reward use of the more fuel efficient two-wheeled vehicles. We have not been persuaded by this argument. First, many people may be tempted by such a proposal to buy a relatively inexpensive moped to receive an extra allotment of coupons for their car. Second, owners of motorcycles and mopeds would not benefit by being able to drive more because of their increased allotments. Our analysis shows that allotments for motorcycles and mopeds which are in amounts less then allotments for automobiles still would allow the more fuel efficient motorcycles and mopeds to be driven significantly more than the average mileage for such vehicles. Therefore, full allotments more likely would result in only a monetary windfall since the excess coupons would be sold on the exchange market. Motorcycles and mopeds therefore will receive an allotment index less than 1.0.

All vehicles (except motorcycles and mopeds) will have the same index number and therefore will receive the same ration allotment (in a given State), regardless of fuel efficiency. This will give a significant advantage to fuel efficient vehicles.

Diesel-powered vehicles also will not receive an allotment index, as diesel fuel will not be subject to rationing under this plan.

570.24 Limitation on Distribution of Ration Rights. One of the recurring comments on the issue of whether ration coupons should be allotted to licensed drivers or registered vehicles was that the per vehicle system disproportionately favors persons who already own more cars or who can afford to purchase additional cars. Another popular comment was that people will buy several “junkers” in order to receive extra ration rights.

In response to these comments, DOE has incorporated a new § 570.24 in the final regulations which provides authority to limit the number of allotments distributed to any person or household. As a matter of policy, it is desirable to impose a reasonable limit on the total number of allotments given to persons or households that have several registered vehicles, not all of which are used intensively. DOE has not yet arrived at a practical mechanism that would accomplish that objective, so the plan does not provide for any specific limitation. During pre-implementation, however, an equitable and enforceable means of imposing a limitation on allotments will be developed.

The allotment limitation would not be intended to preclude the distribution to a person or members of a household of additional ration rights granted from the State Ration Reserve. Thus a person or household with a bona fide need for more than the prescribed limit of allotments would have the opportunity to recoup lost allotments from the State Ration Reserve. Section 570.24(b) provides that ration rights that would be distributed to a person or members of a household but for the limitation in subsection (a) will go to the State Ration Reserve so that the State would not in any way lose ration rights as a result of the limitation.

For purposes of this section, household is defined in § 570.24(c) as persons related by blood or marriage who live together in a single residence.

We specifically asked for comments on the question of whether business should receive a higher ration level than individuals. Most businesses which commented supported this concept, agreeing that individuals can conserve by eliminating discretionary driving.

Section 570.43(b) of the regulations provides that unredeemed ration rights are freely transferable. This provision constitutes the authority for a ration rights exchange market, which should promote a more efficient use of available gasoline. We do not anticipate regulating the ration rights market through price controls or any other mechanism. However, in order to prevent abuses in the market that might arise, § 570.43(b) gives DOE authority to regulate the market if necessary. Furthermore, as noted in earlier sections, DOE will be authorized by the proposed regulations to buy and sell coupons.

References

Cox, S. 2013. Any way you slice it: the past, present, and future of rationing. New Press

 

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