Gas prices are notoriously fickle.
For proof, take a look at GasBuddy’s Gas Price Chart. The 10-year view looks like a mountain range, with sharp peaks and even sharper valleys. Experts predict that, for a variety of reasons, prices will only continue their upward climb in the years to come.
Whether you’re planning a summer vacation or you have a long commute to work each day, that’s bad news for your budget. Here’s what you can do to prepare for higher gas prices in the months and years to come.
What Causes Rising Gas Prices?
Many factors contribute to rising gas prices.
1. Geopolitical Tensions
The geopolitical tensions that occur all the time around the world can have a big impact on gas prices.
For example, President Trump’s decision to withdraw from the 2015 Iran nuclear deal caused speculators to predict higher oil prices due to potential availability issues. The political and social crisis in Venezuela, the world’s fifth-largest oil producer, also caused a rise in oil prices as the chaos and uncertainty in that country resulted in a steady decline in oil production and exports.
2. Supply & Demand
Supply and demand also play a role in gas prices. Summer is 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.
3. Your Location
Business Insider reports that what you spend on gas can vary dramatically depending on where you live. People in Wyoming or Maine spend much more in gas than people in Michigan, for example. That’s because in Wyoming and Maine, you typically have to drive much farther to get to a store or school.
4. Refinery Maintenance
Another factor that puts pressure on gas prices is the annual summer maintenance at oil refineries. Typically, refineries switch to summer-blend fuel in the spring, and they make repairs and upgrades to the refinery before doing so. This causes a supply disruption and even takes some refineries offline for a period of time.
5. Crop Failures
Summer-blend fuel is required to contain a certain level of ethanol, which is made from corn. When floods or droughts wreak havoc with the Midwest’s corn crop, gas prices invariably go up.
6. Supply Disruption
Lastly, an unexpected supply disruption, such as a hurricane in the Gulf or military conflict in the Middle East, can send prices even higher, especially if oil refineries (either locally or globally) are damaged and have to halt production.
The Impact of Higher Gas Prices
Higher prices at the pump affect everyone, 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.
Travel Is More Expensive
When gas prices rise, travel becomes a lot more expensive.
Airfare also goes up when the price of oil increases. For example, in 2018, the price of jet fuel jumped by 50%. It cost some airlines, such as American Airlines, over $2 billion. Some airlines raised their prices by 4% or more to offset these costs.
When fuel costs go up – especially when they go up rapidly – airlines often add extra fees to compensate. They might also cut service, offering fewer flights as a way to save money. Higher ticket prices make business travel, family trips, and vacations more expensive – unless, that is, you take steps to avoid extra airline fees.
Food Is More Expensive
When oil and gas prices rise, so do food prices. 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.
Also, most of our food is transported across long distances. The Center for Urban Education about Sustainable Agriculture 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 analyzes food prices each year. Typically, food prices increase by an average of 2% to 3% annually. In May 2018, when the price of gas was 31% higher than the year before, beef prices increased by 1.7%, wheat prices by 14%, and egg prices by a whopping 33%.
And keep in mind that the experts can be wrong about price increases. In 2017, the Food and Agriculture Organization of the United Nations predicted that food prices would rise by 1%; instead, they rose by more than 8%.
Consumers Have Less Discretionary Income
When you pay more for a necessity such as gas, you have less for discretionary spending on things such as dining out or buying clothes.
This drop in discretionary spending hurts industries too. When revenue continues to decline, industries such as 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.
How to Save Money When Gas Prices Are High
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 are some ways to save money on gas, as well as in other areas that are directly affected by higher gas prices.
1. Inflate Your Tires
According to the American Automobile Association (AAA), only 17% of cars have properly inflated tires. Properly inflating your 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 tire pressure recommendations, 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.
2. Drive More Conservatively
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.
3. Carpool to Work
Carpooling, also called ridesharing, can cut your fuel costs by 50% 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.
4. Buy a More Fuel-Efficient Car
If you’ve been thinking about trading in your current vehicle, considering investing in a smaller, more fuel-efficient car. Driving a fuel-efficient car can really make an impact when gas prices are high.
Be careful about when you trade in your vehicle. You’re likely to get a better price for a large vehicle when gas prices are low. For example, when gas prices spiked in 2008, people didn’t want to buy larger trucks and SUVs, and trade-in values for these vehicles declined.
5. Take Public Transportation
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. If you really need a car for the day, you can use Turo.
That might sound extreme, but plenty of people find it worthwhile. 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.” When gas prices go up, ditching your car might be a viable option.
6. Grow Your Own Food
When gas prices go up, so do food prices. 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:
- Snap beans
- Bush beans
- Lettuce (especially spinach)
- Herbs (such as basil, parsley, rosemary, oregano, fennel, chives, dill, cilantro, garlic, mint, and thyme)
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 time, you’re more likely to get a discount because farmers don’t want to take their excess produce home. It’s worthwhile to find someone local who sells eggs as well, since the average price of eggs continues to go up each year.
7. Buy Food In Bulk
Buying food in bulk is a great way to save money, especially if prices are on the rise. 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:
- White rice
- Dried beans
- Canned beans
- Peanut butter
- Canned tomatoes
- Any grain (such as quinoa, lentils, oats, and barley)
- Dried pasta
Shopping at big warehouse stores such as Sam’s Club and Costco 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.
8. Eat Less Meat & Stock Up on Vegetables
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 adds up to 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 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.
9. Use GasBuddy
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 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?