While we wait for producer and consumer inflation data later this week, here’s a note about gas prices.

With the newest shock in the Middle East, conventional wisdom is that the price of oil and gas will spike. And maybe they will, but the truth is, because of the involvement of both market and geopolitical players, nobody really knows.

Remember that Russia’s invasion of Ukraine in February last year caused gas prices to rise from $3 to $5 a gallon by June. And then they went right back down to $3 by last December.

Here’s a graph of oil prices for the past year, with this morning’s current price as I write this called out at the far right:

Gas prices ended last Friday at roughly $82.82 a barrel, and have risen over $3 a barrel so far this morning. But a week before prices were over $90 a barrel. So we haven’t even challenged that level yet.

Maybe oil prices will go over $100 a barrel because of this latest turmoil if the petrosheikhdoms of the Middle East decide they have to put pressure on the West to in turn put pressure on Israel. Or maybe they will sit on their hands, and maybe oil slides back towards $70 a barrel.

The point is, nobody really has a clue. And even if prices move sharply in one direction in the next month or two, they may move right back shortly thereafter.

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