Can someone explain these prices?

April 5, 2026·30 min·2 clips

Researchers call it 'rockets and parachutes': gas prices rocket up instantly when crude oil rises but drift down slowly because stations price off their next incoming load, not their existing tank.

1. Explain It to Me from Vox examines why gas, coffee, and milk prices are significantly higher than they used to be, with expert interviews on each commodity. 2. The episode features Sam Ory (executive director, Institute for Climate and Sustainable Growth, University of Chicago), Ailina Peng (agriculture reporter, Bloomberg), and Chuck Nicholson (supply chain professor, Penn State University). 3. The episode's central thesis is that prices for everyday goods are driven by specific, traceable supply shocks — not simply inflation — and understanding the mechanism helps consumers contextualize what they're paying. 4. More than half of the price of gas at the pump is set by the global crude oil market, with state and federal taxes, distribution costs, and refiner profit making up the rest, according to Ory. 5. Ory describes the 'rockets and parachutes' (also called 'rockets and feathers') phenomenon: when crude oil prices rise, gas station prices immediately increase because stations reprice based on anticipated delivery costs; when crude falls, prices decline slowly because existing inventory was purchased at higher prices and consumers comparison shop less when prices are falling. 6. The current Strait of Hormuz crisis is unusually severe — roughly a fifth of the world's daily oil supply passes through the strait, representing 10 to 15 million barrels per day, compared to disruptions of 1 to 2 million barrels that characterized earlier crises like the 2011 Libyan civil war. 7. The U.S. cannot opt out of global oil pricing despite being the world's largest producer because U.S. refineries are configured for heavier crude that requires imports, while domestically produced light sweet crude is exported. 8. Goldman Sachs and Saudi Aramco have projected that if the Hormuz crisis is not resolved by mid-April, oil could reach $180 per barrel — a level Ory says would likely trigger recession. 9. The diesel shock ripples beyond personal transportation: diesel accounts for nearly 40% of aviation operating costs, jet fuel markets are in a parallel crisis, and everything delivered by truck carries embedded diesel costs. 10. Ory notes that while concerning, prices are still below the 2007-2008 peak of $147 per barrel that preceded a major recession, and the full economic impact requires more time to play out. 11. Coffee prices have been rising since early 2024 due to a drought in Vietnam, the world's top Robusta producer, which pushed demand to Arabica beans from Brazil, the world's top grower and the U.S.'s top supplier. 12. Brazil then experienced back-to-back droughts and a frost, sending coffee prices to a 47-year high toward the end of 2024, according to Bloomberg reporter Ailina Peng. 13. Trump's tariffs placed a 50% rate on Brazilian imports — Brazil supplies more than a third of all coffee consumed in the U.S. — adding further pressure on top of already stressed commodity markets. 14. Because roasters contract inventories months in advance, consumers continue paying elevated prices even after commodity costs partially recovered, due to the lag in the supply chain. 15. Industry sources told Peng that coffee prices are unlikely to return to pre-shock levels even if tariffs end and climate stabilizes — the broad expectation is permanent elevation. 16. Consumption patterns are shifting: consumers are cutting afternoon coffee purchases, energy drink sales have grown, and the industry is moving toward fun and convenient iced and canned formats rather than premium 'third wave' specialty coffee. 17. Penn State's Chuck Nicholson explains that the $4.03 average price of a gallon of milk breaks down roughly as 50% to the farmer, 20% to the processor, and 30% to the food retailer. 18. Milk prices vary significantly by location — $2.50 in Cincinnati versus over $5 in Chicago — because some retailers use milk as a loss leader to signal overall price competitiveness while others price to market. 19. Retailers practice 'price smoothing,' absorbing some shocks on the way up and slowly passing reductions on the way down to avoid dramatic consumer price swings like those seen with eggs and gasoline. 20. Nearly 40% of all U.S. milk production is converted into cheese — predominantly mozzarella for pizza — and pizza restaurants quietly reduce the quantity of cheese on pizzas when dairy prices spike rather than immediately raising menu prices.

As heard by us

A practical explainer for anyone wondering why coffee, pizza, and kids' activities have started to feel so expensive.

Everyday sticker shock gives this episode its shape: youth sports fees, a pricey Domino's order, an oat milk iced coffee edging toward $10, and the cheese choices that can change the cost of a pizza.

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Why you'd press play

When your coffee tab starts feeling like a bill.

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