>>>Do you believe that it would reduce an oil companies costs if it were to build a new refinery? (Including the cost of building it).
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>>In the traditional "capitalist" scheme it wouldn't reduce their "costs" BUT they could make more money by selling more product. That is the general basis for any new capital investment in any business.
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>So building a refinery would increase production for that given company? Would the average cost (their cost) per gallon be higher? Or lower?
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>How would this company who built this refinery sell more product than they were before?

I think you're getting it!
ANY company making ANY capital investment see their cost per unit go up when they build more production capacity.
But they would do so anyway on the basis that they can get sales from the pent-up demand and by taking sales for other companies in the same business.

The oil companies, on the other hand, are cooperating rather than competing. In such a case satisfying any pent-up demand AMONGST THEMSELVES only results in a lower price, thus lower profits.
You can be sure that the have been busy refining their techniques to have maximum price while maintaining maximum production. But they will certainly not do ANYTHING that might result in a lower price.

Can you see how this is NOT "capitalism" but some corruption that pretends to be capitalism but is a carefully applied scheme exploiting those parts of "capitalism" that maximizes their profits??? It EXPLOITS the comsumer rather than SATISFYING the consumer. That, my friend, is not capitalism.