expanded to 94 percent of capacity. The American Petroleum Institute reported U.S. refineries operating at 95.4 percent of capacity in the last week of October 1973, according to the API old definition, and 99 percent of capacity according to the API new definition.

During 14 years of import quotas restricting the availability of crude oil in the U.S., some new refinery capacity was shifted abroad from the U.S. The oil industry has been well aware of impending, then actual declining domestic supplies of crude oil. Government policy in the U.S. until 1973 has been to reaffirm the barriers against import of foreign crudes. While U.S. refinery capacity has increased in the U.S. year by year, the expansion has been less than what would have been true in the absence of the quota system.

To compound the problem of inadequate refinery capacity, American refineries in general have been constructed to process the so-called "sweet" crudes (low sulfur content crudes). In general, U.S. crude oil production has been low in sulphur content compared to most foreign crudes. With the end of the import quota system, free importation became the rule. However, Persian Gulf crudes are characteristically "sour" crudes (high in sulfur content) and it was the Persian Gulf area that was undergoing a rapid expansion of crude oil production. However, the "sour" crudes tend to corrode equipment in refineries constructed to handle "sweet" crudes only. Therefore, American refineries were somewhat constrained in their ability to import and refine foreign crudes even after the import quota system was eliminated.

The environmental concern contributed to the refinery capacity problem in the U.S. New refinery construction, as well as major plant expansions in existing refineries, required environmental clearance and a consequent delay. Without questioning the legitimacy of the environmental concern, it seems obvious that new environmental requirements have contributed to the refinery capacity problem.

The refinery bottleneck is explainable in terms of the factors listed above. Again, we need not resort to a conspiracy theory to explain the problem.

In conclusion, the shortages and rapid rise of energy prices are not attributable to a successful monopolization and conspiracy by U.S. oil companies. Much of the shortages, the rapid rise in prices, and the very high profits in 1973 and 1974 find their roots in past and present policies which promoted low energy prices and accelerated the rate at which domestic energy supplies are depleted. In addition, the actions of the Arab countries, while outside of the direct control of U.S. policy, had a dramatic effect on the domestic market.