Higher input costs. Lower demand. Lower profit margins - or even losses. Hmm. Doesn't sound like a good business to me.

Yet folks like the Democratic candidate for governor, Tim Mathern, think North Dakota should dump billions of taxpayer dollars into a state-owned oil refinery. Quite frankly, that's crazier than the sporadic talk over the years of the state running an airline - and I didn't think I'd hear anything to top that gem.

Disagree? I give you the latest figures from the state mill in Grand Forks. Officials expect a quarterly loss of about $3 million, while hoping for a break-even fiscal '08. The cause? Those pesky high input costs and flour buyers responding to high prices by buying less or switching to other varieties.

Tesoro, the firm operating the Mandan refinery, is illustrative of similar challenges in their respective business (the one Mathern & Co. think is a such a cash cow). Go look at their most recently quarterly "earnings" - the firm lost money. The primary reasons? High input costs and lower demand, exactly the same things currently plauging the state mill.

Conversely, Tesoro actually made money (a.k.a. profits) in the same quarter in 2007 when oil prices were nearly half what they are now. Wonder if Tesoro prefers $130 oil or $70 oil?

With all due respect to grain millers everywhere, the added complexity, daunting financial scale and overall risk of building and running an oil refinery are exponentionally more challenging than grinding wheat into flour.

Rather than wasting time discussing a state-owned oil refinery, what's really needed is for a number of Americans, starting with the proponents of this idea, to move to the front of the line for a course in remedial "Economics 101." I'd also recommend a follow-up course in "Capitalism 101."