As President Donald Trump is demanding a federal investigation into why retail gas prices aren’t plummeting as rapidly as crude oil costs, economist Paul Krugman argued that the current $3.92 national average is simply acting like “feathers” drifting down after a major global supply shock.
The ‘Rockets and Feathers’ Effect
The national average for regular gasoline currently sits at $3.928 per gallon. While this is down from $4.515 a month ago, it remains significantly above last year’s $3.224 average, according to AAA data.
Instead of corporate price-gouging, Nobel laureate Krugman recently outlined, in a Substack post, why consumers are experiencing this lag.
Krugman described a “well-documented pattern” in how fuel markets respond to international shocks. “When there is a global shock that causes the price of crude oil to soar, gasoline prices rise like a rocket,” Krugman wrote.
