Gas Prices Continue To Soar In Massachusetts; When Will They Drop?
STONEHAM (CBS) - Will gas prices stop spiking? And if so, when? The short answers: yes, and we don't know.
Gas prices nationwide have spiked since Russia invaded Ukraine. In just the last week, gas prices in Massachusetts have jumped to roughly $4.16 a gallon, up 54 cents from prices a week ago.
"The price of oil sort of reflects what people expect to happen in the future, and so it's…that people are worried about what's going to happen in the future, so they are raising the price even more," explained MIT Professor of Economics Jon Gruber.
"President Biden is being urged by many people today to shut off all petroleum imports from Russia," added Boston University Questrom School of Business Professor Jay Zagorsky. "He hasn't decided as of this minute whether he's going to do it or not, but if you were an [oil] trader, would you want to buy oil from Russia this morning only to find out tomorrow it was embargoed and you lost the deal or the money?"
Add the political tensions due to the war in Ukraine in with a limited supply of oil exported by OPEC, the organization of 15 countries that controls most of the world's oil supply, and the skyrocketing prices are explained.
"This is an artificially set price because OPEC controls how much oil they release," explained Professor Gruber. "[OPEC] like[s] the price going up, but if it goes up too much and people stop driving, it's bad for them, so at some point they will release more oil and keep the price from going too high."
When more oil is released is the moment that prices will start to drop. However, two things are uncertain: when that will happen, and how quickly – or slowly – gas prices will drop.
"If you need gasoline don't say 'oh I'm going to wait a day,'" Professor Zagorsky said. "I would pump up and fill up my tank right now, because gasoline prices rise quickly but they don't fall as fast as they go up."