Re "Gas prices likely to go higher" (Business, Oct. 4): The current rise in gas prices is the result, to a great degree, of the lack of refinery capacity above that required to satisfy our current demand for the special formula gas required by air quality regulations. It was noted that when Chevron's Richmond refinery was shut down following the recent explosion, it was providing 16 percent of the special formulated gasoline required on the West Coast.
When existing tight refinery supply is reduced there is not a concomitant reduction in demand. We are tied to our cars. Prices rise when our demand is constant and supplies are reduced. Under classical economics this would result in an increase in supply, bringing supply and demand back in balance. A long-term solution is increasing the supply, either by expanding current refinery capacity or the construction of new refineries. Are there petroleum refiners willing to take such a risk in modern California?
-- Frank Yeamans, Sacramento
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