The Antifreeze Story: Does the Government Care About Inflation?
The retail price of antifreeze has tripled between 1973 and 1974, soaring from approximately $1.90 a gallon to $5.50 a gallon. Bewildered consumers want to know why.
Wouldn’t you think that somewhere in a federal government that is supposedly committed to fighting inflation and anti-competitive practices there would be a coherent report or explanation? Well, there is not.
My associate, Frank Warner, searched the bureaucracy. He found that neither the Justice Department nor the Federal Trade Commission nor the Department of Transportation had any study or any investigation completed or underway. Even the Council on Wage and Price Stability, a federal inflation-monitoring group, has no analysis for inquiring consumers.
The antifreeze story is the product of what happens when a concentrated industry interacts with a rabid inflation psychology among retailers and consumers.
There are only eight producers of antifreeze inthe country. DuPont is phasing out its Zerox because it can make more money using the raw materials to manufacture polyesters and paint. The main ingredient of antifreeze is ethylene glycol, which is produced by only thirteen corporations. Union Carbide controls 40.7 percent of this output. The three largest producers, Union Carbide, Dow Chemical and PPG Industries, make up two-thirds of the nation’s production.
While producers were assuring the public this summer that antifreeze would level off at a retail price of $3.00 per gallon, word spread that an antifreeze shortage was nevertheless imminent. Consumers rushed to buy and paid per gallon prices of $6, $8, and in Canada as high as $20. While consumers were stampeded by fears of a short supply-zooming price antifreeze situation, retailers were doing very little to relieve their worries as they increased prices from 200 percent to 400 percent over 1973 levels.
A District of Columbia Exxon station manager is selling antifreeze at $8 per gallon. He refused to disclose hiswholesale price. However, Exxon’s regional office said the wholesale price was $2.91. When a few weeks ago a Fall River, Massachusetts department store placed antifreeze on sale at $3.99 per gallon, the rush of customers resulted in a number of injuries.
The tightened supply of ethylene glycol and the ethylene oxide from which it is made is pushing private label brands of antifreeze out of business and further concentrating the market. No new ethylene glycol plants have been built since 1969, although demand for polyester fiber, requiring ethylene glycol, has increased sharply every year until this year.
There are differing predictions about the supply outlook for this winter. The Department of Commerce predicts a 10 percent shortage this winter. Yet Union Carbide and Dow Chemical say there is enough antifreeze to meet this winter’s needs, though distribution problems may cause spot shortages. If this is true, then prices should start falling.
In the meantime, Consumer Reports gives tips to motorists in its October issue about how to make your oldand new antifreeze last longer. And Du Pont, whose departure from the antifreeze business is worsening the tight supply condition, suggested that a system be established for recycling used antifreeze.
But the overriding question is how consumers can respond to sudden shortages accompanied by spectacular price increases. Tried successfully by the oil industry last winter, other concentrated industries are finding it convenient to contrive shortages or restrain supply as the surest way to big profits.
Once again, the issue is monopoly versus competition. Unless the Ford administration backs up its widening concern over anti-competitive abuses and monopoly inflation with administrative and judicial action, along with tougher‑legislative proposals to deconcentrate the economy, giant corporate oligopolists will further expand their control over the economy, squeezing out competing small business, and create the ultimate shortage — a consumer shortage -‑ which can plunge the nation into a full-fledged economic disaster.
Interested readers may wish to write to theirmembers of Congress, demanding an inquiry into the shortage phenomena, and to U.S. Attorney General William Saxbe, urging that the anti-monopoly laws be fully enforced.