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Russia-Ukraine Crisis Will Cause Prices On Gas And Other Items To Go Up

NEWTON (CBS) - When he announced sanctions against Russia on Tuesday, President Biden warned Americans that "defending freedom will have costs." Specifically, those costs will be felt by most Americans at the gas pump, since Russia is the world's second largest oil producer.

"Putin is in the driver's seat, I think, at this point about whether he wants to risk further sanctions continuing into Ukraine or whether he wants to let things settle down for a while," explained MIT economist Jon Gruber.

At the gas pump Tuesday night, people in Newton were not thrilled by the knowledge that already high gas prices will likely rise. "It's kind of wild," said Johnny Franchio of Peabody. "It's kind of one of those things though, where like you need the gas, so there's really nothing you can do."

The economic effects of the conflict overseas will not only be felt at the pump, though. "[It's] not just the price of driving, the price of a lot of goods will go up when the price of oil goes up. That is really sort of one of the major prices we keep an eye on in the economy, and so it's a broad concern," explained Gruber.

How steeply prices will rise and for how long is unclear and is contingent upon the ongoing uncertainty in Ukraine.

"I think if we were told tomorrow 'that's it, that's as far as [sanctions are] going to go,' oil prices will come back down and things will calm down," Gruber explained. "I think [prices] will remain unstable as long as we are uncertain, and I don't see that uncertainty resolving any time soon."

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