6 Ways to Prepare for Rising Gas Prices – $5 Per Gallon Gas Coming Soon?
During the financial crisis of 2008, the price of gas hit $4 per gallon in many parts of the United States. When the price plummeted to $1.60 per gallon in early 2009, the nation breathed a collective sigh of relief.
Gas prices are notoriously fickle. GasBuddy’s Gas Price Chart looks like a mountain range, with sharp peaks and even sharper valleys. If you look at the past 18 months on this chart, you’ll see that we’re in the middle of another steady increase in prices. As of May 2018, the nationwide average for a gallon of gas was just under $3, which is 20% higher than the previous summer. In New York and Hawaii, two of the priciest states for gas, prices are now inching towards $4. And experts predict that, for a variety of reasons, prices will only continue their upward climb.
Whether you’re planning a summer vacation or you have a long commute to work each day, this is bad news for your budget. Here’s what you can do to prepare for higher gas prices in the months and years to come.
Many factors are contributing to the current rise in gas prices. One is President Trump’s decision to withdraw from the 2015 Iran nuclear deal. This withdrawal, and the ensuing sanctions, may limit that country’s oil exports by as much as 10% to 15%, according to The New York Times.
Another factor is the political and social crisis in Venezuela, the world’s fifth-largest oil producer. The current chaos in that country has resulted in a steady decline in oil production and exports.
Summer is also peak driving season as people take family road trips and fly across the country for vacation. This increased demand for gas leads to higher prices for everyone.
Last, an unexpected supply disruption, like a hurricane in the Gulf or military conflict in the Middle East, could send prices even higher, especially if oil refineries (either locally or globally) are damaged and have to halt production.
Higher prices at the pump affect every family, and if you’re living paycheck to paycheck, these increased costs can stretch your budget to its limit. They also impact more than just your gas expenditures. Here’s what you can expect as a result of higher gas prices.
In an interview with MarketWatch, Patrick DeHaan, head of petroleum analysis at GasBuddy, says there is a 65% chance the U.S. will hit $3 per gallon sometime this summer. He also says the average family will spend around $200 more on gas this summer than in 2017. CNBC states that the average family will spend $320 more on gas this year due to higher prices.
Airlines will also likely raise prices. USA Today reports that American Airlines is expecting a 24% rise in fuel costs for 2018, and other airlines are facing similar cost hikes. When fuel costs go up – especially when they go up rapidly, as they’ve been doing recently – airlines often add extra fees to compensate. These increased ticket prices will make business travel, family trips, and vacations more expensive.
When oil and gas prices rise, so does the cost of food. Food production depends on oil and gas. Farmers need plenty of diesel fuel to run the tractors and combines that plant and harvest crops. Oil byproducts are also used in many fertilizers, so when the price of oil goes up, so does the cost of fertilizer.
In addition, most of our food is transported a very long distance. The Center for Urban Education about Sustainable Agriculture (CUESA) estimates that the ingredients for the average meal in the U.S. travel 1,500 miles from farm to plate. The more it costs shipping companies to transport our food, the more we have to pay for that food.
The U.S. Department of Agriculture (USDA) predicts that food prices will rise by 0.5% to 1.5% this year. And this is only the overall price increase; the price of some foods will increase much more than this. Poultry prices, for instance, are expected to increase by 1.5% to 2.5%. The price of eggs is already 23% higher than in spring 2017, and it’s expected to increase by 6% to 7% this year. Fruit prices are expected to increase by up to 3%, while dairy milk will rise by up to 2.5%.
Keep in mind that the experts can be wrong about price increases. In 2017, the Food and Agriculture Organization of the United Nations (FAO) predicted that food prices would rise by 1%; instead, they rose by more than 8%.
When you’re paying 20% more for a necessity like gas, you have less for discretionary spending on things such as dining out or buying clothes. For example, the Brookings Institution estimates the average family spends $1,500 on gas each year. A 20% increase in gas prices means they will spend $300 more on fuel; that’s $300 they won’t have to spend on “extras” like takeout and shoes.
This drop in discretionary spending hurts industries too. When revenue continues to decline, industries like retailers and restaurants are forced to start laying off workers. This cycle of decreased spending and increased layoff puts a damper on the economy and can easily snowball. A 2008 study by The Heritage Foundation determined that if gas prices went from $3 to $4 per gallon to $5 to $6 per gallon, the economy would see 586,000 lost jobs and personal consumption would decrease by $400 billion.
The good news is there’s plenty you can do to save money and increase your fuel efficiency when gas prices are on the rise. Here’s how to save money on gas, as well as in other areas that will be directly affected by increased gas prices.
According to the American Automobile Association (AAA), only 17% of cars have properly inflated tires. Properly inflated tires can increase your fuel efficiency by 3%.
To check your tire pressure, you’ll need a pressure gauge, which you can purchase inexpensively at many gas stations and auto parts stores. Your tires’ recommended pressure will be either on a sticker inside the driver’s door jamb or listed in your car’s manual. It’s best to use the manufacturer’s recommendations for tire pressure, and not the tire pressure listed on the tires themselves. Always check the tire pressure when the tires are cold and the car has not been driven for a while.
Aggressive driving – which the U.S. Department of Energy (USDE) defines as speeding, rapid acceleration, and rapid braking – can lower your fuel efficiency by 15% to 30% on the highway and 15% to 40% in stop-and-go traffic.
Instead of zooming ahead and braking suddenly, take your foot off the pedal and coast to a red light or stopped car, applying the brakes gradually as needed.
It also helps to slow down in general. According to the USDE, gas mileage decreases significantly at speeds above 50 mph. For every 5 miles you go over this speed, you’ll likely pay an additional 20 cents per gallon of gas.
Carpooling, also called ridesharing, can cut your fuel costs by half or more, and it’s a great way to ease some of the stress of driving to and from work every day. To find potential commute partners, start asking around at work to see if any of your colleagues are interested in sharing a ride. You can also find potential partners using uberPOOL or Waze Carpool.
If you’ve been thinking about trading in your current vehicle, now might be a good time to invest in a smaller, more fuel-efficient car. When gas prices spiked in 2008, people didn’t want to buy larger trucks and SUVs, so if you trade in your larger vehicle now, you might get a better price for it than you will if gas prices continue to climb.
Americans love to drive, but statistics show that when gas prices jump, so does the number of people taking public transportation. A study published in the Journal of Transport Geography found that every 10% rise in fuel costs led to a 4% increase in bus ridership and an 8% rise in rail travel.
Public transportation is cheaper than commuting on your own. There are plenty of ways to travel cheaply on the bus or train. If you live in a large metro area and really want to save money, you might even be able to live without a car altogether.
That might sound extreme, but plenty of people have found it doable. Journalist Sara Bernard went car-free for a year in Seattle. She writes, “The fact is that, even if I rented cars every other weekend, it would likely still be cheaper for me than buying and owning a car.” With gas prices on the rise again, ditching your car might be a viable option.
When gas prices go up, so does the cost of food. One way to protect yourself from higher food prices is to start a home garden. Homegrown food is healthier, more nutritious, better for the environment, and far less expensive than produce you buy at the grocery store.
If you don’t have space for a big garden, you can start a container garden on a deck, patio, or sunny windowsill. Some vegetables do very well in containers, including:
Starting a home garden, either in-ground or in containers, can save you hundreds of dollars each year on your grocery bill, especially if food costs continue to increase.
Another way to save is to shop at your local farmers’ market. If you visit the market close to closing, you’re more likely to get a discount because farmers don’t want to take their excess produce home. It will also be worth your time to find someone local who sells eggs, as eggs are expected to see the highest price increase in 2018.
Buying food in bulk is a great way to save money, especially if prices start to increase consistently. And although there are some things you shouldn’t buy in bulk, plenty of foods keep safely for quite some time. These foods keep very well when bought in bulk:
Shopping at big warehouse stores like Costco and Sam’s Club can also help you save on gas by enabling you to combine errands. Nielsen reports that when gas was high in 2008, 29% of consumers shopped more at warehouse stores to avoid making multiple trips.
Bulk foods can do more than help you save money in the short term; they can also be an important part of your emergency long-term food pantry. A stockpile of non-perishable food can help feed your family during a hurricane or long-term power outage. It can also be a life preserver if you or your spouse lose your job or fall ill.
Another way to offset rising gas prices, and the resulting higher food prices, is to eat less meat and dairy products. Eating a vegetarian diet can save you quite a bit of money; TIME estimates that vegetarians save at least $750 per year more than their meat-eating counterparts.
Reducing or eliminating meat from your diet is also healthier. Harvard Health states that eating a Mediterranean diet, which has an emphasis on plants with a sparing use of meat, is known to be associated with a longer life and reduced risk for several chronic illnesses.
Even cutting meat from your diet one day per week will add up to some significant savings throughout the month, which could help offset what you’re spending on gas. The global movement Meatless Monday states that the average family could save $80 to $100 per month simply by skipping meat one day per week.
Another way to save is to stock up on in-season vegetables and then store them at home. For example, you could buy fresh corn in bulk at your farmers’ market and either can it yourself or freeze it to eat later. You can do this with any fruit or vegetable. Learning how to can your own food and store it safely over the long term is a great way to save money and increase your self-sufficiency.
You can join GasBuddy’s Pay with GasBuddy program to save even more. The program is simple: link your checking account to GasBuddy, and you’ll get a swipeable card that works just like a debit card. You’ll receive 10 cents off per gallon for your first fill-up and 5 cents off per gallon after that. You can use the GasBuddy card at any gas station.
That said, it’s important to do your research. Some credit cards offer 3% or more back on gas purchases, so be sure to check out the best gas credit cards to find the best deal. Using a credit card with cash back on gas could very well save you more than 5 cents per gallon.
Global demand for gas will continue to increase as people in developing countries become more affluent and the population grows. Add in political changes, natural disasters, and other possible unknowns, and it’s likely that in the months and years to come, gas will only get more expensive. Your best bet is to take steps now to offset the added cost.
What tips and strategies do you have for saving money on gas? How are you preparing for rising gas prices?
Heather Levin is a writer with over 15 years experience covering personal finance, natural health, parenting, and green living. She lives in the mountains of Western North Carolina with her husband and two young sons, where they’re often wandering on frequent picnics to find feathers and wildflowers.
6 Ways to Prepare for Rising Gas Prices – $5 Per Gallon Gas Coming Soon?
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