WASHINGTON — The oil-refining industry may have helped create a gasoline market that's so tight, some industry experts and critics say any hurricane, pipeline break or other disruption is likely to cause price spikes.

During unprofitable times in the 1990s, some refiners' internal memos show they wanted to reduce refining capacity to boost profits. The industry dismisses those memos' significance — and the notion it tightly controls supply — but ultimately, its investments in refining capacity haven't kept pace with the growth in demand.

Today, there are fewer refineries and fewer, but more profitable, refining companies.

Refiners also reduced the amount of gas they keep in reserve to use as a cushion during disruptions, and some companies limited production in the Midwest in 2000 for the sole purpose of maximizing profits.

Those moves are legal and considered to be sound business practices. But they contribute to higher prices at the pump.

Some members of Congress and consumer advocates say the oil industry has taken such practices to anti-competitive extremes that ultimately hurt consumers.

"Gasoline is not Starbucks coffee," said Tyson Slocum, director of Public Citizen's energy program. "It is a critical commodity that should not be subject to the whims of the supplier."

The price of crude oil is the largest determinant of the price of gasoline, accounting for about half of the cost of a gallon and most of oil-producing companies' profits.

But crude must be refined into gasoline, and disruptions in that process can lead to sharp price increases. That's especially the case today, as the demand for gas grows faster than U.S. refining capacity.

"It will not make a difference if Saudi Arabia ships an extra million or 2 million barrels of crude oil to the United States," Crown Prince Abdullah's foreign affairs adviser, Adel Al-Jubeir, said last spring. "If you cannot refine it, it will not turn into gasoline and that will not turn into lower prices."

There were dozens more refineries in the 1990s, but they weren't as profitable. Environmental regulations on the products and facilities required expensive updates and some refining companies "didn't make the economic cut," said Bob Slaughter, president of the National Petrochemical and Refiners Association.

Even as smaller, inefficient refineries closed, some in the industry still worried about having too much refining capacity to turn a profit, according to "highly confidential" internal documents exposed in a 2001 investigation by Sen. Ron Wyden, D-Ore.

An internal 1995 Chevron memo relays the warning an energy analyst made at an American Petroleum Institute convention: "If the U.S. petroleum industry doesn't reduce its refining capacity, it will never see any substantial increase in refining margins (earnings divided by operating revenue)."

Similarly, a Texaco executive in 1996 complained of "surplus refining capacity" and wrote that "significant events need to occur to assist in reducing supplies and/or increasing the demand for gasoline."

API chief economist John Felmy called the statements "purely musings" and said it's "utter nonsense to argue that we're tightly controlling supply."

"We've expanded capacity over the last 10 years, the equivalent of a new refinery every year," Felmy said. "But these radical groups will come up and say things that are fundamentally untrue."

Further, the industry projects capacity increases of 1.4 million to 2 million barrels per day in the next four years.

The Federal Trade Commission, in its investigation of post-Katrina gas prices, found no evidence suggesting companies refused to sufficiently invest in new refineries to tighten supply and raise prices in the long run. Instead, the agency said the evidence suggested further investment would have been unprofitable.

Indeed, refining capacity increased by 12 percent since 1987. But U.S. demand for gasoline increased by 28 percent. Refineries are now using nearly all of their capacity, compared with 83 percent in 1987.

The U.S. refining companies that stayed in the business — 55 in 2006 compared with 188 in 1980 — are seeing the rewards.

ExxonMobil's refining and marketing segment ended last year with a 40 percent profit increase. The top independent refiners and marketers collectively scored a 92 percent increase.

Refiners keep some gasoline on reserve at U.S. refineries or terminals to protect against price spikes in case of a disruption. But inventories have declined from 40 days of average U.S. consumption in the early 1980s to about 23 days in 2004, a Government Accountability Office report stated.

Their move to a just-in-time delivery system mirrors other industries, and it may reduce gas prices because of lower storage fees. But it also can increase price volatility.

On Aug. 26, just before Hurricane Katrina hit, U.S. inventories for gasoline were 194 million barrels, less than three days' supply before hitting the minimum operating level, a Congressional Research Service study found.

An Arizona attorney general's report on post-Katrina gas prices argues that, while the practice may work under ideal conditions, every disruption caused by natural disaster, refinery outage or broken pipeline affects the tight supply-demand balance.

"Petroleum markets quickly tighten and prices skyrocket," the April 2006 report said. "Thus, consumers pay a high price for the oil companies' profit maximization strategies."