Gas prices are sky high as a result of Russia’s invasion of Ukraine and the ensuing sanctions against Russian oil exports. Will prices go even higher or will they start falling? In his latest blog post, UBC Sauder School of Business Associate Professor Werner Antweiler takes a look at what future markets for crude oil are telling us about where prices are headed.
He finds that the market for crude oil is in strong “backwardation”: prices for future deliveries of crude oil are much lower than for deliveries next month. The blog explores how markets will adjust to the new situation, and why oil markets tend to “overshoot” in the short term.
Some voices are also calling for governments to intervene and reduce fuel taxes. British Columbia’s neighbouring province Alberta has done just that. In his blog, Associate Professor Antweiler shares his views on this policy approach, and why we need to focus on a future in which we are less dependent on fossil fuels.