“Yes. If that were not true, the gas station would just jack the price up to 10 billion dollars per gallon. Why doesn’t that work? Because consumers won’t pay it.”
There’s a difference between can’t and won’t. And then why do they only seem to jack the price considerably around major world events? The ablility for the general public to pay $3 or more per gallon was greater 5 years ago than today. Why didn’t they jack it up then? Or even before that? They still would’ve paid it. That kind of leaves a few holes in your theory.
Do you understand that they are in competition with each other for your business? Oil producers compete with other oil producers; refineries compete with other refineries; gas stations compete with other gas stations. If one gas station sells gas for $3/gallon and the one across the street can make more money by undercutting him, they will. But when costs get high enough, it's not worth it.
This is kind of beside the point, but on what basis do you claim that "the ablility for the general public to pay $3 or more per gallon was greater 5 years ago than today"? I can't imagine any sense in which that's a true statement.
That kind of leaves a few holes in your theory.
My "theory" is just basic economics. Buy this book by Thomas Sowell and read it. I'm dead serious - if conservatism is to survive we need people who understand economics, and Sowell is the best out there at explaining it. That's how I learned.