> however cheap the competition can produce oil it will be priced This assumes a perfectly competitive market, which is far from reality. Oil production is dom

> however cheap the competition can produce oil it will be priced This assumes a perfectly competitive market, which is far from reality. Oil production is dominated by a cartel. As a cartel can increase prices to maximise profitability, to a large extent, the price of oil is controlled by the price elasticity of demand.