Lincoln Chafee is not the sharpest knife in the Senate, which is why he joined Democrats in killing legislation that would have reduced the price of gasoline. As with any issue of prices, the laws of supply and demand rule regardless of what politicians might think. With no new refinery built in America since 1976, it is no wonder gas prices are increasing. It doesn't matter if the price of oil drops, since you have to refine it before you can put it in your car.

The problem is that Congress, through a maze of regulations, has made it unlikely any company would pursue new construction of a refinery. So, as demand grows, supply remains constant and prices rise to clear the market. But Democrats don't know how markets work, and Chafee doesn't either.

"We should be addressing our consumption, not just demand," Sen. Chafee said [quote in a Dow Jones Newswire story with no web link and in the Wall Street Journal (subscription required)]

Address consumption, but not demand?Apparently, the problem is not just America's supply of gasoline, but Chafee's supply of grey matter. Will someone on the dunce Senator's staff please inform him that consumption is demand!? Meanwhile, Chafee and the Democrats ignore the actual problem.

Proponents note that refinery capacity in the United States has dropped by some 50 percent in the past two decades – and that refineries are currently operating at close to 100 percent. The last new refinery was built in the United States in 1976.

Refiners now must supply 18 different formulations of gasoline, but can produce only one formulation at a time. Some of the specialty fuels are summer formulations that produce lower emissions to meet Clean Air Act standards in cities with high levels of air pollution.

Laws that took effect in 2004 forced refiners to switch some formulations. California, New York and Connecticut no longer sell fuel with the water polluting oxygenate MTBE, instead changing to fuels with ethanol, a fuel derived from grain. Refiners must make new reformulated gasoline to blend with the ethanol.

So the combination of these 18 boutique fuels and the damaging ethanol requirement (midwestern corn farmers are some of America's most egregious parasites with their ethanol subsidies) are a major issue. Also, the Byzantine permitting process is so bad that barely anyone is willing to risk the capital to build a new refinery. It took one company in Arizona 5 years to get an air-quality permit and they hope to be operational 15 years after beginning the process.

If Chafee and the Democrats refuse to allow an expansion of refining capacity, then either prices will continue to rise or we will have to ration gasoline. They should tell Americans today which of those two alternatives they advocate.

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