That was the message this week from several experts about the rising prices we’re all paying at the pump.

The market – that efficient capitalist distributor of resources worldwide – is doing what it’s supposed to do, and right now, that’s driving up prices.

We love the market when it drives prices down, but now many people, starting with our leaders, are looking for someone to blame for prices going up. President Obama told federal regulators to look for market speculators. Congressional Republicans say look at President Obama.

People who watch the oil market for a living, however, say it’s none of the above. It’s the market at work.

See, for instance, this April 29 story in the Los Angeles Times (http://www.latimes.com/business/la-fi-oil-refineries-20110429,0,7502154.story). Prices go up when supply is lower than demand. US refiners are only running their refineries at about 80% of capacity, and they’re exporting record amounts of their output, both gasoline and diesel. Why? Because consumers elsewhere will pay an even higher price than in the US, due in some part to disruptions in supply from Libya. And the combination of lower supply to the US and higher prices elsewhere drives up prices here, which is driving record profits for the companies.

What can we do? Very little. That’s because we have no ready substitute for petroleum products, according to Adam Sieminski, chief energy economist for Deutsche Bank in Washington, DC. He told the Energy Information Administration (EIA) annual conference April 26 that supply and demand are both what economists call “inelastic” – neither side can quickly and easily substitute other products.

That means any disruption on either side shows up in price right away. It’s not market manipulation – it’s supply and demand.

On the supply side, crude oil has to be refined into products like gasoline and diesel in order for us to use it. But refiners often can’t quickly substitute one crude oil source for another if a disruption occurs. For instance, Sieminski said, refineries using very low sulfur Libyan crude to make gasoline for Europe cannot easily switch to Saudi crude. There is a low-sulfur Saudi product, but it’s not low enough to substitute directly, without adjustments to the refining process, involving cost and delay.

On the demand side, American consumers can’t readily switch to some other fuel, said Sieminski and Ernest Moniz, director of the Massachusetts Institute of Technology’s Energy Initiative. We use the bulk of our oil in transportation. Consumers’ choices are limited to driving less or paying more. Many Americans are locked into driving by homes distant from public transportation, as well as locked into whatever car they own.

Moniz said one “game changer” for the US consumer would be a widespread switch to flex-fuel vehicles and installation of blender pumps. That would require no innovation, just adoption.

Flex-fuel engines are already available for some models, and Moniz said adapting all new internal combustion engines, even in hybrids, can be done cheaply. Blender pumps, which let consumers choose their desired mix of gasoline and a domestic biofuel, usually ethanol, are already in widespread use in Brazil, where consumers can vary their mix depending on prices. If those were available, drivers of flex-fuel vehicles could opt for more domestic ethanol when oil prices rose – they’d have a market choice.

Another option: more vehicles fueled with domestic natural gas. Compressed natural gas (CNG) can power cars and other light-duty vehicles while liquefied natural gas (LNG) can power long-haul trucks. But the vehicles remain more costly here than in other countries where they’ve proven more popular. And like blender pumps, CNG and LNG refueling stations are limited because gas station owners can’t afford to install them without assurance of lots of customers.

And of course, there are electric vehicles. A new generation of EVs is now selling, but they are still relatively costly and their batteries, limited.

But with alternatives to gasoline and diesel so limited, each time something disrupts supply, auto-dependent American consumers are nakedly exposed to price hikes.

Many European countries have had high fuel prices, through taxes and other devices, since the 1970s oil shocks. Their governments decided to try to insulate their economies from oil price swings, with varying degrees of success, by keeping the cost high enough to encourage alternatives.

That idea didn’t sell here, and the world market indeed brought low oil prices in the 1980s and 1990s. That lulled US manufacturers into building, and Americans into buying, hugely inefficient vehicles, which continue to help lock in US oil demand.

Many developing nations subsidize the street price of petroleum fuels, in an attempt to spur economic development, so the governments act as shock absorbers for their economies and keep the retail price constant. That’s an approach free market advocates deplore.

The upshot is that we have essentially no planning for what to do when oil prices go up worldwide. Worse, we have no planning for what to do when other nations become wealthy enough to outbid us for petroleum products – which will happen soon if it’s not happening right now.

The rising exports from US refineries showcase the crux of our vulnerability: no matter how much oil we let the oil companies drill, pump, and refine, we still have to buy it from those companies at the world market price. The US is the world’s third largest oil producer but we don’t own any of it – under our free market system, private companies do – and we still have to import as much oil as we produce to supply what we consume.

That leaves us dependent on forces beyond our control, forces which shape the world oil market. So we have pundits and politicians searching for pernicious manipulators to blame. Witch-hunting may be temporarily satisfying, but it won’t change what sets the price: the competition for oil resources on a rapidly growing globe.

To change that equation, the free market offers a simple solution: we either rein in our demand, or pay up.

Follow me on Twitter: @energyrider6