Greekfire described the free market approach pretty well–and how it solves problems if we just let it alone to work.
The price system is also a signaling system. Higher prices encourages consumers to conserve at the same time it encourages suppliers to reallocate resources to produce more, plus come up with substitutes. Government interference thwarts the natural and healthy tendencies of both suppliers and demanders to eventually solve the problem.
Much of the current high world oil price can be attributed to government price controls in developing countries. China, India, Indonesia and many others have government-set prices that discourage conservation by consumers. I understand that Venezuela and Iraq have gasoline well under $1 per gallon. Of course their long lines of cars are pictured on our TV news coverage, but the dolt reporter never states what the government fixed the price of gas at. Also, how many Americans reading the news about electricity shortages and blackouts in Baghdad know that their electricity is not even metered? Sales of air conditioners there are high, but why should anyone take any electricity-conserving measures if it is free when it is on.
