Crude Oil Deregulation
The maximum price that a producer may charge in a first sale of domestic crude oil has been controlled by federal regulation since August 19, 1973. There have been discussions from time to time of decontrolling crude oil pricing, but, as yet, that has not been fully accomplished.
President Carter announced a phased decontrol of crude oil on April 5, 1979. He coupled that announcement with a request to Congress for a windfall profits tax.2 At the writing of this paper, that windfall profits tax is still wending its way through the legislative process and its exact nature is still in doubt. Any discussion of the tax at this time would, therefore, be premature. The Department of Energy (DOE) has acted upon the President's [15-2] instructions and issued a series of amendments to the crude oil pricing regulations that will have the effect of decontrolling crude oil prices by October 1, 1980. Whether these decontrol measures will continue, in light of the gasoline and diesel fuel shortages which have occurred, remains to be seen.
The decontrol changes were effective June 1, 1979. They offer producers a substantial increase in revenues. They are, unfortunately, very technical in nature and are best understood in their historical context.
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