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The Concepts of Supply and Demand
Gasoline prices are influenced by a multitude of factors. Crude oil prices, the major component of gasoline, are higher. World oil supply is tight due to record growth in world oil demand. With gasoline demand at record levels, U.S. refineries have responded by producing record amounts of gasoline. Most refineries are running at a 96% utilization rate, far exceeding the general industry average of about 82% (Hackworth & Shore, 2004). There has been no net increase in U.S. refining capacity for the past three years, and the last new U.S. refinery was built in 1976 (Parker, 2004). …
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