The petroleum industry is oligopolistic, meaning there are few producers relatively speaking, and there are high barriers to entry. Moreover, there are long-run economic profits for those firms due to their market power. With that said, why do you suppose I filled up my gas tank in 1999 for $.99 per gallon, only to pay $4.15 a little over six years later and 14 years later still around $4.00? What do you suppose happened during that time in which prices rose 300% or more and never looked back? Is it all due to global demand rising?
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