Internal oil company memos from the time show the industry was well aware of the problem. A Texaco memo warned that "Supply significantly exceeds demand ...," which had led to "very poor refinery financial results."
"So [the companies] merged, and they shrunk; they closed refineries, they said for economic reasons," Cooper said.
There are 149 refineries in the United States, 26 fewer than there were in 1995. And the top 10 oil companies control close to 80 percent of the country's refining capacity.
But oil industry leaders say that was a necessary business decision in a competitive market.
"The smaller, less-efficient refineries really couldn't compete in that environment. They did shut down, so we had a lot of falloff in the industry," said Rayolda Dougher, a spokesperson for the American Petroleum Institute. "And you are right. If you had overcapacity and you are not able to sell your product at a profit, you are going to have to cut back that capacity. But look over time and look at the record, and you will see that the capacity has grown."
Refineries have, indeed, undergone construction efforts to expand capacity, but while the amount of gasoline U.S. refineries can make has gone up 14 percent, the demand for gasoline has gone up 15 percent.
"They make more money keeping the market tight," Cooper said. "They have gained power over price by controlling the price at the refinery gate."
Repeated government investigations have found "no evidence of illegal collusion" or price control by oil companies (although several investigations expressed concerns about concentration of ownership in refineries). Chevron's Kell said refiners do not manipulate supply.
"I can certainly assure you that is something we don't do," Kell said. "The majority of the factor that drives gasoline is crude oil price, and that's something that's certainly out of the control of manufacturing."
In the end, Americans use virtually every drop of gasoline made here. There is such a tenuous balance between supply and demand that any disruption at the refinery can quickly be felt at the pump.
Imported oil accounts for 70 percent of the U.S. supply, and much of that comes from half a world away.
"Most of the world's remaining reserves of oil are in the hands of just five countries," said Vijay Vaitheeswaran, a professor in residence at New York University and correspondent for the Economist magazine. "Saudi Arabia, which has a quarter of the world's oil reserves, or its four immediate neighbors: Iran, Iraq, Kuwait and the UAE."
It is in the interest of crude oil suppliers to keep prices low enough that consumers won't wean themselves from the product, he said.
"The Saudis do want to have moderate oil prices, because they know that if you kill the goose that lays the golden egg, there goes your own revenues," Vaitheeswaran said.
When oil prices peaked at $147 a barrel last summer, the United States asked Saudi Arabia and other members of the OPEC oil cartel to ramp up production and help bring down the price. U.S. Secretary of Energy Steven Chu said the country is, in effect, at the mercy of foreign oil producers.
"When a country like the United States depends on oil to really run its engine or the industry, we are at the mercy of the suppliers of oil," Chu said. "We are spending hundreds of billions of dollars a year importing oil and, so, we are heading toward a train wreck."