PRESIDENT REAGAN was absolutely right to decontrol oil and gasoline prices, quickly and without qualification. It is an essential step toward a rational energy policy. You can dismiss all of those tendentious claims about the added cost to the consumer. The added cost to the consumer will probably be in the range of zero. More than Five-sixths of the country's crude oil supply is decontrolled. Home heating oil was decontrolled five years ago. As for gasoline, competition is holding actual retail prices well below the legal ceilings. For the country as a whole, these controls have brought nothing but harm, and the end of them will bring nothing but benefit.
The controls were wrong in theory when President Nixon imposed them in 1971. They were demonstrably wrong, as much costly experience already showed, when Congress insisted on perpetuating them in 1975. President Carter wisely began the process of decontrol last spring. The schedule was a gradual one running into next fall, when the law will expire altogether. Mr. Reagan has now sped up that final process by eight months.
Why were controls wrong? Because they disguised the dangerously high cost of oil to the American economy. The control system required refiners with cheap, price-controlled domestic oil to subsidize other refiners' imports. That held the price to American consumers far below the cost of the imports. Americans used a lot and kept the flow of imported oil high. That seriously damaged the country's balance of payments and eroded the value of the American dollar.
The high level of American imports helped create the very tight market that enabled the exporting nations to double their prices in 1979. By now, the price to the American consumer is undoubtedly higher than it would have been in the absence of any price controls at all. As an attempt to protect the American economy from higher oil costs, the controls have been an unmitigated failure.
Prices have been rising, inevitably, even under the controls. They aren't going to rise any faster in the absence of controls, unless another world shortage develops. Decontrol may even slow to rise a little. The control system contained a number of hidden subsidies -- including the usual fat subsidy for the independent refiners -- that will now lapse, saving the public a little money.
At worst, in another international shortage and panic like the one in 1979 following the Iranian revolution, prices will indeed rise. How much? It depends on the scale of the shortage. There could be a squeeze on the supply line as early as this spring, if the war continues between Iran and Iraq. But in return for higher prices at the gasoline pump, you will get insurance against a return of the gasoline lines. Those lines were created by the price ceilings, and the cumbersome allocation rules that they required. Having been through two memorable episodes of gasoline lines, most Americans would surely prefer the next time around to pay in money rather than time, anger and anxiety.