PEORIA MAGAZINE April 2022

W elcome to Peoria Magazine’s Econ Corner, a recurring feature in which we pose questions to experts about various economic issues and how they affect our lives and careers here in central Illinois. This month’s participant is Dr. David Cleeton, Chairman of the Department of Economics at Illinois State University. Peoria Magazine (PM): Russia invades Ukraine and the price of gasoline tops $4 per gallon at central Illinois gas stations. Everyone accepts that we now live in a global economy, but can you connect the dots for us as to how this conflict so very far away has such a significant ripple effect here in the middle of America, especially since it involves a Russia with an economy smaller than the state of Texas, representing less than 2 percent of global GDP? Dr. Cleeton: The great expansion of domestic output in the United States in the 21st century has made our country the largest producer of oil and gas in the world, and that has led to an almost total net independence in the sense that net imports — imports less exports —have become very small. Furthermore, Russian products are less than 10 percent of our imports. But oil and gas are produced and traded in a global market in which imbalances in supply and demand can create significant price swings in the short run ... In the short term, the United States does not have enough current capacity to increase output sufficiently to make up for the absence of Russian imports. Only major OPEC+ producers such as Saudi Arabia, the UAE, and on the gas side Qatar would be able to significantly increase production. So, we will be faced with higher oil and gas

ECON CORNER

An Interview with Dr. David Cleeton of Illinois State University

INTERVIEW BY MIKE BAILEY

72 APRIL 2022 PEORIA MAGAZINE