Summary: The Council on Wage and Price Stability was established in 1974 with broad authority to review and analyze activities which threaten to increase individual prices or the overall rate of inflation. GAO inquiry was based on extensive interviews with the Council's staff, a review of the wage and price standards, and an analysis of published data on energy prices. The inquiry revealed that the failure of the Council could be traced to limitations in the standards' coverage, monitoring, and enforcement. The price standards do cover the oil industry, but not all parts of it. Where the standards apply, they cover compliance units rather than individual product prices. Despite questions of whether compliance with standards is complete, the inquiry revealed that the incomplete coverage of the standards, and the way they are applied would have permitted substantial price increases in oil products. The Council's staff is not large enough to monitor all firms in the oil industry. Furthermore, the Council has limited power to enforce the standards. The Council's inability to do very much about oil product price increases raises deep issues concerning the Council's mission and responsibility. No single tool of economic policy, no matter how powerful it may appear, should bear single-handedly the burden of bringing inflation under control. What is needed today is a careful orchestration of all the tools which can help solve the problem of inflation.
