Actually, I think I am thinking at the micro or local level.
You do realize that most chain stations are independently owned and operated, but get their gas from a regional supplier, and that regional supplier sets the price that the operator pays. And, that the operator typically charges a few pennies per gallon over their cost. And, that the operators have computer feeds from their suppliers showing the price change throughout the day.
When I see the price go up 20¢ a gallon as it has a few times the past days, I take it that the price to the operator has changed because I see the price of crude going up similiarly; and at a macro level I see that same relative price increase throughout most of the country.
That is true supply and demand at a macro level in action.
However, when ONE or TWO or a handful of LOCAL operators raise their prices by over $2/gallon, well, that isn't supply and demand at a macro level.
Yes, I understand you are talking about "macro economics" (not macro vs micro with regards to regionality or domain) and "supply-side economics", but, frankly, the price of gas when it hit $6/gallon yesterday in Atlanta was not pure supply and demand...it was mostly hysteria. The supply hadn't changed radically, and the increased demand was caused by hysteria and short-lived, and the price gouging fed the artificial demand spike.
Case in point, gas prices have already dropped back to their norm in most of Atlanta. Because the "run on the banks" was over. It was all artificial.
I agree that there is an element of supply and demand at play, as the operators couldn't gouge if the demand wasn't there. But it was gouging nonetheless, and a vicous cycle.
You can't seriously think that $3.09 to $6.00 per gallon change in one day with a change back to $3.00 the next wasn't gouging?
TJR