[mouserider]

Redbird is totally right about greed and fear, but to a degree, the market does correct itself if it is wrong, either gently or with a huge crash.

Individual gas station owners, if they are owned/operated, do have the ability to move their prices up or down to a degree. Even in my neighborhood, there is one crazy station that is always 20-40 cents more than any other station around, probably because they are right off the highway at an intersection and they're looking to land the "sucker" and from the looks of it, the honey trap works.

Depending on what state you or city you are in an there may be restrictions on how much flexibility an individual station gets. For example, in NJ, if you have a station on the Turnpike or Parkway, contractually, they are only allowed to change prices once a week so there's always a lag.

As for correlation between crude prices and pump prices, there is always a lag because refineries have stock holdings and refineries buys crude futures rather than spot prices.

Refineries and gasoline companies also have the ability to "subsidize" the consumer by absorbing some of the costs, why? It can be good for business in times when crude prices are just spiking.