Wonking Out: Rockets, Feathers and Prices at the Pump

July 2022

The New York Times

Severin Borenstein, Faculty Director, provides insight in The New York Times into the correlation between oil and gas prices.

“The clearest explanation I’ve seen is in a relatively old paper by Severin Borenstein, Richard Gilbert and A. Colin Campbell. I’d summarize their argument as follows: When oil prices shoot up, owners of gas stations feel empowered not just to pass on the cost but also to raise their markups, because consumers can’t easily tell whether they’re being gouged when prices are going up everywhere. And gas stations may hang on to these extra markups for a while even when oil prices fall.

 

Photo: nytimes.com