1. Price is not based on fairness. Price is based on what the market will bear.
2. Price is the mechanism that determines distribution; i.e., those who can pay the price receive the good being distributed.
However, someone someplace debates "what the market will bear." They must take many things into account. There are actual costs of purchase, transportation, refining, and distribution of oil/gas. Actual costs would include maintaining the entire infrastructure of a company.
In a crisis it is possible not to have actual costs change at all. Due to the crisis, however, one can run up the price 2,3,4,10 fold over what it previously had been. This might be necessary because of a lower quantity being sold. To maintain the entire company infrastructure, a higher price would have to be charged on the lower quantity sold.
However, there are other issues involved in what the market will bear. There are social and political issues that a wise company would bear in mind. In other words, if it is possible to cover total company expenses and bring in a profit acceptable to the company's accountants by selling at $3 a gallon, yet it is known that one could probably charge as high as $7 a gallon and actually get it because of the anxiety that generally accompanies a crisis, then the company would have to pay attention to the social and political repercussions of that action.
Price-gouging is in the eye of the beholder. I'm sure that's true. But, if the beholder has political power, then the pricer should beware.
A price is an INDICATOR. He then gives an analogy involving body temperature (fever).
Would somebody who has the book close at hand please look it up and post the pertinent comment?