Reason's Sam Staley looks at Hawaii's recent gasoline price cap debacle and the 1970s oil shortage and writes:
As prices went up, they conserved. They did it first, as they are now, by driving less. Then, as they realized the higher prices were permanent, consumers changed what and how they drive.
Average fuel consumed per vehicle dropped 14 percent in the 1970s and another 10 percent between 1980 and 1985. Average fuel consumed per vehicle has remained remarkably stable since then, reflecting the stability of gas prices during that period.
Meanwhile, we started driving more fuel efficient vehicles. In 1980, we were sputtering along traveling just 13 miles per gallon. By 1997, we were traveling 17 miles on each gallon of gas. That's an increase of almost a third.
Competition helped this along, too. In 1980, imported passenger cars averaged almost 30 miles per gallon and the average domestic car clocked in at just 23 miles per gallon. By 2000, the two groups had reached parity at about 29 miles per gallon. Gas, as a share of the total costs of driving a car, has fallen from 28 percent in 1980 to 12 percent in 2004.
What's the takeaway for U.S. policymakers and citizens? If we're serious about conserving oil, the best policy is to let markets work.