Newest political fad: The 1970's

If you were a politician, one would think that you would do precisely the opposite of almost anything that was done in the hideous 1970's. Apparently, the 1970's are high fashion for today's politicos, though:

The reason why many states instituted gas rationing in 1979 - depending on your license plate number you could only buy gasoline on specified days - was, as today, the tightness in supply. The shortage in supply has not led to suggestions of rationing these days.

In response, Congress passed and President Jimmy Carter signed a windfall-profits tax on oil companies were making huge profits. Those prone to see conspiracies saw the oil firms as profiteers. By March of 1981, the cost of a gallon of gasoline in today's dollars averaged more than $3.10, slightly higher than now.

The windfall-profits tax may have been good politics, although it did not help Carter get re-elected.

But it was lousy policy. Between 1980, when the law took effect, and 1986, when a crash in energy prices made it irrelevant, domestic oil production fell 1.3 billion barrels. That's because the tax removed the incentive for companies to produce more, and at the margins they left their crude in the ground.

If a windfall profit tax had that effect in the 1980's, it will have that effect today. Keep it up, boys and girls of the swamp. You'll sink this economy yet.