Even as the summer travel season is winding down, drivers have certainly noticed that gas prices are marching back up. Since the law of supply and demand hasn’t yet been repealed (or even suspended by executive order) the answer seems simple enough: increase the amount of gasoline available.

A recent Wall Street Journal article shows that the White House realizes its policies have been reducing the supply (and thus increasing the price) of gasoline. Here’s the story.

Last year, Sunoco announced it would have to either sell or close its refineries near Philadelphia. The Carlyle Group, a private equity firm, has agreed to buy the refining business, even though Sunoco has lost $1 billion running the refineries over the previous three years.

How is it possible for a company to lose that much money in the refining business when gas has been stuck at more than $3 per gallon for years? There are several reasons, but a big one is the cost of federal regulation.

“A key issue Carlyle identified was a 2005 consent decree with the Environmental Protection Agency under which Sunoco agreed to limit emissions at its refineries,” the Journal reports. “Carlyle wanted to work on the refinery without triggering costly environmental reviews. The White House referred the issue to the EPA [Environmental Protection Agency], which along with state and local environmental officials agreed to modify the decree, allowing Carlyle to transfer emissions credits from the Marcus Hook refinery, in effect giving the Philadelphia refinery greater leeway to pollute.”

That’s one way to put it. One could also say that the EPA is giving the Philadelphia refinery greater leeway to produce gasoline, which can “protect consumers from higher prices at the pump and keep people from losing their jobs,” as an Obama Administration spokesman admitted to the Journal.

There are other benefits to this deal. Carlyle says it plans to reduce emissions over time by making the refinery more efficient. It also plans to refine more domestic oil instead of imported crude, since as Reuters reported last month, “the surge in U.S. oil and gas production from non-conventional sources such as shale has redefined energy markets and refining in the world’s biggest economy, providing a cheap source of crude for domestic plants.”

But this wouldn’t have happened without the EPA agreeing to ease up on regulations. There’s a lesson here: Private industry is ready to step up and produce the fuel and jobs America needs. But the government remains a major roadblock to progress.

In Philadelphia, the EPA has agreed to get out of the way. Let’s see if this sets a precedent.