“The clearest explanation I’ve seen is in a relatively old paper by Severin Borenstein, Richard Gilbert and A. Colin Campbell. I’d summarize their argument as follows: When oil prices shoot up, owners of gas stations feel empowered not just to pass on the cost but also to raise their markups, because consumers can’t easily tell whether they’re being gouged when prices are going up everywhere. And gas stations may hang on to these extra markups for a while even when oil prices fall.“