All the gas stations get together and decide to charge $4 a gallon?

Sure, companies can greedflation themselves right out of business (no one ever accused these guys of being smart). Or one of them can cheat on the others and lower his prices unexpectedly, wrecking the party for everyone else (no one ever accused them of being honest).

The natural checks and balances that tend to limit these excesses aren't very effective when the participants (and the victims) insist on dismissing them as simply "the way the market works".

The way to look at this is not to see unfair business practices as an occasional aberration that sometimes appears. It is a constant pressure, an incentive, built right into the system. It tends to emerge spontaneously, automatically, unless government monitors the markets and enforces fair business practices. It often appears even when the individual businessmen recognize it a a long term threat. In a laissez-faire economic system, government monitoring and supervision is anathema. There are always hidden costs, unforeseen consequences, collateral damage, that never getr included in the profit and loss statement. Fishing with dynamite is always cheaper.

If you're looking for a Natural Law of Economics, there it is.

1) It is easier to get rich by working with your competitors than by competing with them.

Not to mention,

2)It is easier to meddle in politics and buy legislators and judges than to build and market a better product than your competitors.