Gasoline rationing using exchangeable coupons and ration banking was one of the several plans proposed for dealing with the gasoline shortage which became apparent during the winter of 1973-74. The proposed plan was essentially the following: assuming utilization of 105 billion gallons of gas per year at 60 cents per gallon when a shortage of 10 percent is experienced, the rationing plan would freeze prices at 60 cents and distribute exchangeable coupons for 94.5 billion gallons to private and commercial users, with coupons being used by the recipient or traded in the market. The chief effect of the rationing plan is on the distribution of income. The rationing plan transfers income to households and firms, whereas raising prices transfers income to the oil industry and raising taxes transfers income to the goverment. The magnitude of the income transfer associated with a 10 percent shortage is estimated at approximately 28 billion dollars per year. Other properties of the exchangeable coupon rationing plan to be considered are: (1) the relevant choice indicator that firms and households will use in deciding how much gas to allocate among alternative uses under exchangeable coupon rationing is the sum of the pump plus the coupon proce; (2) the size of the ration to a firm or household does not affect the quantity of gas used, but only affects the income distribution; (3) a new market institution likely to do a business worth 28 billion dollars per year is created; and (4) gasoline rationing regulations with exchangeable coupons must provide adequate audit and enforcement procedures to prevent illegal actions.

  • Corporate Authors:

    Economic Research Service

    Department of Agriculture
    Washington, DC  United States  20250
  • Authors:
    • Edwards, C
  • Publication Date: 1974-7

Media Info

  • Features: Figures; References; Tables;
  • Pagination: p. 55-68
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00095300
  • Record Type: Publication
  • Files: TRIS
  • Created Date: May 29 1975 12:00AM