SACRAMENTO, Calif. — High gasoline prices in the Sacramento area and across the United States serve as a reminder of an interconnected world economy as Russia's invasion of Ukraine fuels uncertainty in the oil and gas market.
Despite crude oil prices crashing to below $100 a barrel, down from more than $130 earlier this month, it may take time for gasoline prices locally to follow suit.
"Commodities markets are always pretty volatile, and oil markets respond a lot to geopolitical uncertainty," said Mark Agerton, assistant professor of Agricultural & Resource Economics at UC Davis.
Economists have informally observed that prices of products like crude oil tend to "rise like rockets but fall like feathers." Agerton said historically, gasoline prices have floated down more slowly than they go up.
A new outbreak of COVID in parts of China has raised concerns of another lockdown and sudden fall in demand. It could help explain, in part, the sudden drop in crude oil prices.
"What happens in Ukraine, what happens in China, these things all get translated to all those prices that we see on the street corner when we go fill up," Agerton said.