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Comment by sliverstorm | Hacker News Reader

Capacity doesn't increase, but costs do decrease as the cost of raw materials drops.

Now, obviously price is only partly determined by cost.

That's kinda the whole point. There is nothing for refineries to gain by reducing the price of gas because...nobody is going to sell gas at a lower price and take over the market because...the EPA does not allow one to build refineries.

Free markets y'all.

So much this. Price is driven by supply and demand. Not the cost of materials.

But price changes supply, no?

Some oil is $1 a barrel to pump. It will always be worth pumping.

Some oil is $50 a barrel to pump. It is only worth it when oil price is greater than $50 a barrel.

Free markets don't account for negative externalities so they have to be regulated y'all. In any case, gasoline prices do move so there must be some market forces at work, but it's a mystery at least to me. I'd love to read an explanation.

>the EPA does not allow one to build refineries

Two refineries have opened in the US this year:

http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6

This is more of a lack of competition issue. A lot of gas suppliers have regional contractors that basically have a lock on entire regions and their prices. There is no incentive to reduce price.

Also, since we can not export crude, but can export distillates, we can sell gas to other countries, increasing demand to some extent.

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