ABSTRACT
As noted in chapter 3, one of the problems with which regulation historically has sought to cope is short-run instability of the price of crude oil. However, as indicated in chapter 5, price fluctuations play a useful role in conservation. In order to clarify the relation of price to conservation, I shall now examine the relevant characteristics of petroleum demand and supply. The major emphasis is on supply, because it is a peculiarity of unregulated supply that causes the price of petroleum to behave in a manner inconsistent with conservation.
