Oil and gas prices have been hit by the “mother of all shocks,” says a Harvard economist.
Energy prices have seen huge swings since the pandemic, and the impact is still being felt.
“If there is an energy shock, it may take a huge price change to clear the market,” said Kenneth Rogoff.
Oil and gas prices are stuck on a rollercoaster caused by the “mother of all shocks” as the supply-demand imbalance caused by the pandemic continues to roil energy markets, says top economist Kenneth Rogoff.
The Harvard professor and former chief economist of the International Monetary Fund pointed out the wild ride this entails oil and gas prices have occurred in recent years, with energy prices plummeting due to the pandemic and skyrocketing as Russia began its full-scale invasion of Ukraine.
Brent crude fell to a low of $14 per barrel in 2020 before rising to a peak of $133 per barrel in June 2022. Similar swings were seen in U.S. gas prices, which fell to a low of $1.77 per gallon in 2020 before peaking around $5 per gallon. in 2022, according to the Energy Information Administration.
Energy prices have fallen in recent months, with Brent trading around $80 a barrel and gas prices cooling to around $3 a gallon. This is largely due to fears of a coming recession in the US and the potential impact on demand.
But over the long term, oil and gas prices are expected to rise – and prices will continue to experience large periods of volatility as the unprecedented shock of the pandemic continues to roll through the market.
‘If there is an energy shock, it may take a huge price change to clear the market. And the pandemic was the mother of all shocks and brought the biggest…