I keep hearing people writing about how government will solve our energy problem. unfortunately both conservatives and liberals often adopt this tone, that somehow government will resolve the energy "crisis". However, there are two mistakes here, being made by both sides. First,t he government will not resolve the problem, private companies will. Second, we don't so much have an energy problem as we have a government problem.

Let me deal with the second point first. It may seem contradictory to say we have a government problem but that government cannot solve it, but it is true. You see, the problem is that we do not so much have a shortage of energy as we just have way too much government.

Now, don't get me wrong, oil prices are high for a reason. The prices are nowhere near as out of line as some would suggest. In fact, if we ignore the absurdly low oil prices of recent years, historically the prices are pretty consistent, or maybe very slightly high. However, as several nations such as China and India recently greatly increased their demand for oil, such an increase is hardly shocking.

And, under normal circumstance, such a  rise in demand would have two predictable results. First, the prices would initially rise tremendously, as they did. This is normal and how the market always responds to a temporary shortage. And, by increasing the profits of those in the field, it brings about the second result.

That is the influx of capital into the industry. We see it all the time. Should there be a shortage of gypsum or Jolt cola or tennis shoes, the price shoot up, profits rise, and investors stampede one another to throw money into new companies or the expansion of the old. The new capital allows for the expansion of existing ventures, the development of new companies, and, when there is simply no possibility of expansion, the development of alternative, substitute products.

The problem is that the government has all but cut off any expansion, and, in most ways, forestalled many efforts to develop alternatives.

Were there no government regulation, the rise in oil prices would have led to the opening of  old capped oil fields which were not previously viable, the drilling of new wells in proven fields, and the exploration for new reserves. We would also have seen a boom in the building of refineries and pipelines, as well as the development of alternatives, such as oil sands and coal to oil conversion, and the conversion of industries to other energy sources, such as coal, natural gas or nuclear.

Unfortunately, except for a few "green" technologies, the government's environmental regulations, and reluctance to embrace nuclear power, prevents companies form adopting most feasible solutions. For example, given our massive coal reserves, the obvious solution for many companies would be to convert to coal, but pollution laws make such a  switch almost impossible.

However, the search for alternatives is usually only a last resort. In a normal industry, the first reaction to a shortage is expansion, and the birth of new firms. But there too, the government has stopped us. Drilling is forbidden almost everywhere. Even old closed fields are often hard to reopen. Which means that the possibility of open up new domestic sources is remote.

As a large percentage fo foreign production is controlled by a cartel, the result of high prices is a slight increase in production, to rteach the optimal cartel price, but nowhere near enough to cause a substantial reduction in price. But that si the result of our regulations, not of any innate shortage of energy.

Now to deal with the first issue, the idea that government will solve the energy problem.

I already wrote about the strangely authoritarian terms which even conservatives use when speaking of oil, so I won't go into that here. But there is more. Often I hear conservatives arguing that they are not opposed to researching new technologies, or aren't opposed to green energy. This is the wrong approach, it suggests that it is the government's function to research and develop technologies.

Research should be private. Government research is either useless or harmful. If a technology will turn a profit, then a private individual will invest in it, so no need for the state, who will just make it less efficiently. If it won't, then it is not worth researching. There is only one reason a technology would fail to be profitable, that is because it is less desirable than the alternatives. If something is less pleasing to everyone involved, why should their money be spent on that rather than a better solution? It makes no sense.

Of course, there is one way in which the government can solve the problem, but that is the one never mentioned.

The government can solve the energy problem, and many others besides, by simply getting out of the way.