>Jim,
>
>So you don't think that a company would build a refinery if it would lower the cost to produce gas? That would give them a competive advantage on price, and potentially a higher profit margin.
>
>If it is not profitable to build a refinery (and I have no knowledge of whether it would be), why should they? In this case, it would raise the cost of gas.

I see you need me to lay out the problem...

The oil companies already own the oil, so it is in their interest to see the price go up as high as possible BECAUSE oil/gas is no longer an "optional use" product but rather is needed by everyone (transport or power generation or plastics manufacturing or heating...).

The oil companies consolidated in the 80s and 90s, and in doing so shut down almost half of the refining capacity. The rationale was simple: the same company (as a result of mergers/buyouts) now owned 3 or more refineries in one area where only 1 was necessary/sensible. This was true enough but with the hidden impact that there was no longer any excess capacity to meet peak demands.
Fewer refineries, thus less capacity, results in a changed supply/demand (the whole basis of capitalism) where demand far outstrips supply. In such cases it is capitalism's wont to increase the price of the limited supply.
This would be so, and is so, regardless of the price of crude oil. If there is less gas than needed then it's price goes up until even the highest bidder cannot pay. It settles at the max they can pay.

With so very few oil companies "competition" no longer applies. If someone did come along to open an independent refinery then two thing would happen:
1) the crude supply would be hard to get and pricier to transport;
2) the oil giants would cut their prices temporarily to put it out of business;
3) If those hurdles were overcome an existing oil company would buy them out.
In addition, of course, such a move could only help in a very limited geographic area of the country.

In other word the oil companies deliberately set about to limit supply so that they could claim supply/demand to raise their prices. And they ain't about to cut their own profits just to make some people feel good.

They've taken capitalism and applied it to benefit themselves at the cost of their customers... which really isn't "capitalism" at all!!! Capitalism has at its root that people demand more of a product so it becomes profitable to make more of it, and not the abonimation practised by big oil.
Does that make it clearer?