If the construction industry and its many customers thought that they were going to catch a break from escalating inflation, they are sadly mistaken. Some of the wildly oscillating materials like lumber and cement are moderating, but the out-of-control petroleum markets are exacting a new tax on businesses and individuals that will be difficult, if not impossible, to sidestep. But that tax is not going to the public good, and there should be a reconciliation of that account.

As regular gasoline hits $3 per gallon or more in many areas and diesel fuel even higher, many are wondering how we as a nation and a world got into such a mess. The answer is that it has been a long time coming, partly because there has been no incentive to develop alternative fuels or energy sources and partly because many people, businesses and governments didn’t care.

Today’s developments are a mild refresher course on the effects of the Arab oil embargo of 1973-74, without the pain of massive fuel shortages, 70% price increases overnight and the political intrigue of using oil as a political and economic weapon. Those still are possible, but the causes of today’s price escalation are more complex. There are too many people chasing too little refined product across the globe and too many commodities futures speculators hoping for the worst rather than working toward a solution. Unlike 1973, producing nations are holding back little, if anything.

One reflex reaction by some politicians is that recent mergers in the petroleum industry are the root cause of the price escalation—that firms somehow are shorting supply to drive prices higher. President Bush and Congress have ordered the Federal Trade Commission to investigate. But it has been closely investigating and monitoring the petroleum industry for decades, including 16 large petroleum mergers since 1981. It has found that there is no global concentration of petroleum power. Still, those companies are reaping the benefits, in bad form.

Expanding world demand for petroleum products can be met, at least in the short run, by exploiting known reserves and constructing state-of-the-art refineries, especially in the U.S. Many projects now will get a boost, just as the Aleyeska pipeline did in the 1970s crisis.

But in the end, Big Oil may be the Big Loser. Some firms have alienated the world with a show of excess that makes a Roman orgy look good. This includes record profits, multibillion-dollar stock buyback programs and a $400-million retirement package to one executive.

Big Oil should be subject to an excess profits tax, as is now being discussed in Congress. A formula can be worked out that will allow the companies to prosper, invest in production, refining and transportation projects and help fund research that will move the nation and world in a new direction.