As I’ve written before, the world oil market changed forever in the 1970s, with (nominal) prices increasing by a factor of 15 between 1972 and 1980, leading to “stagflation” in many countries. While prices fell in the early ’80s, they never returned to their previous levels.
Governments around the world took action to try to moderate their demand for oil, and oil products such as petrol and diesel. New Zealand was no exception. The overall goal was to reduce oil demand, in order to minimise our current account deficit. Of course, we still grapple with this problem 40 years on, and oil still makes a big contribution to the deficit which we still run.
Although the “carless days” put in place in 1979 have been enduring in our national memory, the policy wasn’t overly successful, and was scrapped after just nine months. People found ways of getting around the policy, a black market for different stickers sprung up, and the whole thing was a bit of a dead end.
Bob Jones wrote the following letter to the editor at the Evening Post (later published in his book Letters), illustrating that he enjoyed stirring just as much in the 1970s:
All of this car-less day nonsense is ludicrous.
If the government is really serious about saving 10 per cent of petrol consumption they should simply shoot every tenth motorist.
A research paper by Opus looks at the policy responses of the 1970s in more detail, and tries to evaluate their overall impact. The government continued to regulate the price of petrol over the decade (even so, it increased from $0.10 a litre in 1973 to $0.60 a litre in 1982). Today, of course, these prices are not regulated and move freely in response to oil price changes – making demand more responsive.
The government also reduced the top speed limit from 100 km/hr to 80 km/hr – cars are less efficient travelling at the higher speed. They raised the tax on the purchase of larger-engine cars and lowered it for small-engine cars. This only affected cars entering the fleet, and not on existing cars. With that said, Opus find that:
“Within the environment of very high fuel prices and graduated taxation and pricing measures combined with heightened awareness of fuel issues, the behaviours around purchasing of new private motor vehicles altered substantially and quickly.”
Interestingly, Opus found that the “Government appeared to do little to actively improve or promote the public transportation services available”. Patronage continued to fall, and Kiwis continued to buy more cars – with the number of cars per capita and per household increasing over the decade. Today, of course, cars per capita and household have plateaued or are declining, in both New Zealand and most of the developed world. You would hope that governments today would be more inclined to see public transport as part of the policy solution to high fuel prices, but we haven’t seen much sign of that from the current one (or the previous one, for that matter).
Opus’ “concluding discussion” is worth a read, but in brief, the government’s policy platform in the 1970s seems to have had mixed results. Opus suggest that policies aimed at increasing the uptake of public transport might have been more effective in achieving their overall goals.