Replacement.

Let us say your house burns down. You go to the insurance company to collect on your homeowner's policy. What do you hope happens? Do you hope you collect enough money to replace your house, or do you hope they pay you the cost of your house when you built?

Duhhh, you hope they pay you the cost to replace your house. The same goes with gasoline. The cost of gasoline is based on replacement price. I have a gallon of gas, yes I paid $3.00 for it, now if I have to pay $3.05 to replace that gallon, what am I going to charge for it? If I charge $3.01 I can not replace the gallon and go out of business.