True. But I think it's cheaper just to keep the supply down. More refineries mean more cost. It'll take a lot more volume to make up that difference.
I really believe we're the frog sitting in the hot water while they slowly turn up the heat. They turn it up until we start to get jumpy then they back it off a little - for awhile. After a few months of $3.50+/gal for 87 octane self-serve, just think how good $2.90 will look. And it will never go lower again. When the next panic-du-jour sends prices to $4.50 for awhile just think how happy you'll be when they get back down to, say, $3.50. We'll be happy to pay it.
And it won't cost them a cent. Hey, they're just maintaining their profit margins. Your personal "profit margin" will suffer but rest easy - their's won't. We're stuck and they know it.
When you see your item is selling well and people are willing to pay a lot for that item, you don't usually limit production. That tactic might work with limited edition prints or other collectibles which you control, but it might not work with most items. If you cut back on production and are competing with people worldwide you might put yourself out of business. You'd make yourself irrelevant.
With the present high cost of oil, this would be the ideal time to do what it takes to increase supply
Tain't nuttin' compared to the increases 3 decades ago.
Click image to enlarge it
According to the chart, in current dollars, oil was under $5/barrel when I was a newlywed in 1971. By 1981, in current dollars, oil was more than $35 a barrel.
Imagine, a 7-fold increase in cost per barrel.
That's why Japanese cars did well. That's why home-insulation and wood-burning stoves sold like hotcakes.