But until last year, the refining business returned only about a 4 percent profit. It's no mystery why people don't invest in refining under those circumstances. After all, you could simply put money in your checking account and get a better rate of return. Conservatives, alternatively, allege that the environmentalists have blocked new refining capacity. They come and they go.
High prices induce investors to bring new supplies to market in search of profit.
High prices likewise discourage consumption, ensuring that scarce commodities don't become nonexistent commodities. We don't need conspiracies to explain energy markets. Jerry Taylor is director of natural resource studies at the Cato Institute. Peter VanDoren is editor of the Cato journal Regulation. Copyright 2000 Morris Digital Works and The Holland Sentinel.