Elasticity of demand is mathematically known as the percentage change in quantity of demand of a commodity to a percentage change in any of the independent variables that determine demand of a commodity.
Formula = % change in quantity demand
% change in price
Now lets talk about petroleum industry, suppose price of the petroleum increases by 20% and quantity demand decreases by 10% then elasticity will be 10/20 .
Determinants of Price Elasticity of demand depends across commodities - luxury to necessity to neutral. Nature of commodity is all about necessity and luxury. Suppose mobile is a necessity for person but iphone and Blackberry is a luxury. What may be luxury for a person may be necessity for another person.
Alternative uses of the commodity is another determinants of elasticity. It is also called availability of substitute. Imagine price of a consumable item (sugar) rises then itz substitute's (honey) demand will increase.
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