Chapter 1. The Capitalist Answer to the “Energy Crisis”: Pay Higher Prices

After years in the bottom drawer when oil prices were low, the economics of energy has returned to the top of the issues list. The difference between $20 oil and $100 oil concentrates public attention. But the highest price for energy may not be worse than the lowest price.

The United States should have an energy policy aimed at providing Americans with the greatest amount of energy at the least economic and social cost—in both the short run and the long run. How much we pay for gasoline at the pump is important; so is how much our grandchildren will pay for the energy they will need. How can we do both efficiently?

This is a fundamental economic question, not merely a question ...

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