That is exactly the problem if you are on the production side of the equation, you definitely do not want to build more capacity and then have prices tank 5-10 years later. That is exactly what happened last time; prices went up in the 70s, the oil/gas industry spent a bunch of money on capacity, then the oil market crashed in the 80s. Do you really think they will make the same mistake again?

I agree that the US needs a more coherent energy policy, but it needs to work both ways and provide some price stability for both the producers and the consumers; they both need predictability or nothing useful is going to happen. I certainly agree that some controls are required to minimize speculation, but I honestly think that speculation is only responsible for about $10-20 of the current oil price. Even with more controls, I expect the cost of energy will increase significantly before it reaches a supply/demand equilibrium.

Regarding the "environmental movement," it is somewhat of a red herring, I know they are an easy target (for both the industry and the public) but sometimes they are the excuse for inaction, not the real reason. For example, we stopped building nuclear plants due to the economics (not because of the NIMBYs), and we will build them again when the numbers really work.

Regarding the cost to add energy capacity, I don't know the numbers for oil refineries, but I am pretty familiar with the cost of nuclear power plants. In the early 70s, the first generation plants were built for less than $0.5 billion US, by the mid/late 80s the costs were closer to $3-5 billion (partially due to the interest rates at the time). Many of the investors in the later plants lost their butts in a regulated market that did not allow those costs to be recovered in a reasonable time. The new plants being proposed have cost estimates in the $5-10 range. One of the drivers of these new plants is the proposed "carbon tax," which will help make the economics work. Also, keep in mind that one of these plants will serve about 1-2 million people, current nuclear plants provide about 20% of the US capacity, and many of them will reach their end of life within 20-30 years; you can do the math, this will cost real money.