Republicans from George Bush on down caved last week to the latest round of hysteria by agreeing, among other ideas, to yet another investigation of gasoline prices. Never mind that every time the matter has been reviewed, the verdict has been the same: market forces account for virtually all of the supposed “gouging.”

Not that one need have warm fuzzy feelings towards the oil companies and their extremely well paid executives. As the founder of economics, Adam Smith, observed in 1776, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.”

But Smith went on to point out that the best antidote to such tendencies is competition, not regulation – which, he noted, usually winds up making government part of the conspiracy. And in any case evidence is strong that competition is not lacking, at least in that part of the oil business that hasn’t been nationalized by foreign governments.

“From 1986 to 2003, using 2004 dollars, the real national annual average price for gasoline, including taxes, generally has been below $2 per gallon,” noted the Federal Trade Commission in a 2005 report absolving the industry of collusion. “By contrast, between 1919 and 1985, real national annual average retail gasoline prices were above $2 per gallon more often than not.”

In other words, gasoline prices were lower than at any time since 1919 for much of recent history. Some conspiracy! Maybe somebody should have been investigating consumers for “gouging” the oil companies.

And just who is the profiteer here? While the average profit on the sale of a gallon of gasoline is nine cents, the average state and federal tax on that same gallon of gasoline is about 45 cents (and 52 cents in Michigan). And if we must have an investigation, how about investigating the extent to which government regulations drive up prices and block new production?

As usual, Washington politicians are eager to ride the latest “oil crisis” to fame and glory, proposing all sorts of inane ideas to deal with it. At the core of most of them is the populist notion that profit is a four-letter word – and never mind that the profits of many other industries, including banking and food and beverages, are far heftier than in the oil industry.

I once heard management guru Peter Drucker remark, with his usual drollery, that profit is “whatever government lets a company keep.” But most folks have a vastly inflated view of corporate profits. One regular survey of Americans found that the majority believes that the average corporate profit is between 30 percent and 40 percent of sales, while the real figure is closer to four percent.

Washington should cool its carburetors. The pursuit of profit is one of the main engines of Western progress and prosperity. And as people in my neck of the woods are fast learning, it is only out of profit that we can afford to pay for a comfortable retirement. As profits in the steel, airline and auto industries erode or even vanish, so do pensions and health care benefits, not to mention jobs.

If oil really is running out – of which there is little sign, since world reserves keep increasing – profit provides the surest possible motive for finding or inventing new sources of energy.

Mr. Bray writes a column for The Detroit News.