The gas gauge in my car was hovering perilously close to "E" when I pulled into the cheapest gas station in my town the other day. About $59 later, I drove away with some major agita, remembering the times when I'd budget $15 a week to fill up my little car's tank because gas was about 98 cents a gallon.
Those days are long gone.
Consumers can expect gas prices to drop nearly 50 cents a gallon in June-but that may be little consolation to those who face long commutes every day. According to AAA, the average price of gas in the Unites States is currently $3.98, up from $2.89 a year ago. Gas prices have risen 91 cents since January 2011. And, since they usually peak mid-Spring as refiners switch to a more expensive blend (one that doesn't evaporate as quickly during the summer), prices will probably go even higher before they start to fall.
What's causing the high prices? Turns out that the price of oil is only one factor (and that can be affected by a whole host of things, from instability in the Middle East to the weather). What you pay at the pump also has to do with the stock market and competition with other gas stations nearby.
"We have to pay whatever the market says we do. It's an instantaneous world," Joe Petrowski, CEO of Gulf Oil, a big gasoline wholesaler, told the Associated Press in March.
Gas and oil are commodities, and the prices are based on the cost to replace a seller's supply, not on how much the gas cost to produce. While oil and gas producers are pulling in the big bucks, and possibly paying only a tiny bit in taxes, individual gas station owners aren't seeing much of the profit-they only make a few pennies on each gallon they sell. (Most actually make more money when you duck inside their convenience stores to buy water and soft drinks.)
"Gasoline is the only product in this country that if you're a penny different people will go out of their way to go somewhere else," says Jay Ricker, who owns a BP station in Plainfield, Indiana. But when gas prices do drop, you're not likely to see the difference reflected at the pump right away.
"If gasoline prices drop a dime, a station will only pass along one or two pennies a day," Patrick DeHaan, an analyst at GasBuddy.com, told the Associated Press. "They are slower to pass along the discount because they need to make up for money they lost when prices went up."
Aside from consolidating your errands, carpooling, and using public transportation whenever possible, there are some other things you can do to save money at the pump. Max Bohbot, president of auction site Beezid.com, offers these tips:- Drive consistently and carefully. Avoid braking hard or accelerating unnecessarily quickly, you waste gas each time you accelerate just to brake a few seconds later.
- Do your research. Calculate how much a trip will cost in gas (try AAA's fuel-cost calculator) and then compare it to bus, train or air fares.
- Maintain your tires. Check that your tires are inflated according to the manufacturer's recommended pressure. By maintaining well-inflated tires, you ensure your car is getting better mileage than on under-inflated tires.
- Follow the "one minute" rule. If you're going to idle your car for more than a minute, it's worth turning off the engine. If it's going to be under a minute, just leave the car running.
- Keep your vehicle in top shape. Make sure to have your car or motorcycle inspected before you take a road trip, it'll save you money to fix anything that might need repairs before your trip instead of potentially breaking down on the road which can become a costly inconvenience.
How much did you pay last time you filled up your tank? What are you doing to save on gas until the prices come down?
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