Gas Prices are Skyrocketing. How High Will They Go?

I shouldn’t have to write about gas prices here. After all, the site’s name is Sweating the Big Stuff, and – by definition – gas prices shouldn’t be big. Gas used to be cheap, I remember it being as low as $0.95 just a few years ago.

Well, as Bob Dylan would say, times, they are a-changin’.

Nationally, the cost of gas is up more than a quarter since the start of 2012. The American Automobile Association, or AAA, shows gas prices nearly 40 cents higher than they were this time last year. And according to the gasoline price tracking website, things are about to get a whole lot worse.

Gas Buddy’s 2012 gas price forecast predicts the average price for a gallon of regular unleaded – gas with an octane rating of 87, used by 80 percent of all consumer vehicles in the United States – could climb as high as $4.15 by Memorial Day (and in LA, I’ve seen gas as high at $4.47 in the past week!). Depending on where you live, the cost of gas could be as much as 20 percent higher than the national average. The top five cities potentially looking at the nation’s highest gas prices include:

1. Chicago – $4.95

2. San Francisco – $4.85

3. Los Angeles – $4.70

4. Seattle – $4.65

5. Atlanta – $4.60

For all those cities, with the sole exception of Los Angeles, those prices would mark record highs. Just how far could that set you back? AAA’s gas price trip calculator, which factors in your vehicle’s make and model along with your travel itinerary, estimates a roadtrip from Chicago to New York City could cost $131 each way if you made the trip today; but if your plans don’t take you to the Big Apple until after Memorial Day kicks off the unofficial start to the summer travel season, you could be looking at gas prices up to $0.75 more a gallon – adding an additional $26 in gas costs each way. Even if your summer travel plans don’t include driving, you’ll pay the price in other ways, including additional oil surcharges on cruise lines and higher airfare costs.

If you think you’ve heard the reasons why gas prices will skyrocket once again this summer, you’re right. While some of the reasons – like increased demand in developing nations like China and India and the shaky state of the economic recovery in the U.S. – are holdover from last year, however, the 2011 Arab Spring has been replaced by the 2012 crisis over increasing tensions between the U.S. and Iran in the Strait of Hormuz, where one-fifth of the world’s oil must pass on its way to the mass market. If Iran makes good on its threat to close the Strait, it could send crude oil prices to a new all-time high of over $200 a barrel. You know what that means: even higher gas prices here at home.

You can’t predict tomorrow’s gas prices, but you can change your driving habits now in anticipation of what the summer might bring.

What, if any, changes will you make to save on fuel costs if gas prices top the $4 mark?

Gas Prices are Skyrocketing. How High Will They Go?

Sweating the Big Stuff

25 thoughts on “Gas Prices are Skyrocketing. How High Will They Go?

  1. I’m really hoping they don’t get too high. We don’t drive a ton, so if it did go up, there’s nothing we could really do. Either way, I would still have to drive to work.

  2. The past few years gas prices in Michigan have always been among the highest, but for some reason the Midwest is right now among the lowest. That’s hard to say without laughing given that it’s $3.85 but it definitely beats paying at the upper end of the spectrum. We just bought a camper last fall and while I’m looking forward to the camping trips, I’m not looking forward to the fill-up costs that will be part of it!

  3. I purchased some energy stock. That should offset some of the pain. :)
    Gas price rose 40 cents over the past month here. It’s pretty crazy, but we don’t drive that much anyway so not a big deal.

    1. @Jeff @ Sustainable Life Blog, I’m about to move farther away from my job (another 40ish minutes away!), so I’m really hating the increase in prices right now. Your situation sounds absolutely amazing.

  4. Gas prices affect services and products. Transportation costs are very inflationary and unfortunately COLA does not cover it at all. In addition, It takes money away from other things such as savings, investing or paying down debt.

  5. Gas prices haven’t been $0.95, at least in CA, for at least 10 years so using the word “few” is stretching it a bit. Honestly I’m not too bothered because my drive home has magically sped up by 15 min each day this week. This proves that the prices are already affecting habits.

        1. @Daniel,

          This only proves how high the taxes are in CA. It looks like CA has at least a dollar more per gallon tax than NJ. Another thing this proves is that if politicians really cared about the price of gas and its effect on the middle and lower class, they would relax that taxes. You can only blame oil companies so much :)

  6. I understand it sucks but it’s hard for me to relate. Here in Europe gas is so much more expensive than that. Currently
    US$ 10.21 per gallon here in Oslo…

    1. @Ella,

      The reason for the high prices in Europe is that over 90% of the price is taxes used to fund public transportation. In the US, due to our spread out society, we have little or no public transportation, unless you live in a city like New York. It’s unfortunate because I’d love to be able to take a train to work everyday.

      1. @Noah,

        Yes I know… It’s a pity public transportation is so poorly developped in the US… I feel very fortunate to be able to walk to work everyday, it’s stress-free and healthy :-)

  7. My husband drives a small commuter car to work every day, it is 45 minutes each way.

    We have a 15 passenger van that we use once or twice a week to get the whole family to church, or go out as a family. That’s when gas prices hurt. A lot.

    If gas prices continue to go up, we’ll do what we always do. Adjust the budget. We certainly won’t stop going to church ;)


  8. Theres a gas station by me in NJ that says $.99 a gallon thats been closed for years.

    Packer – maybe it was shuttered when it was at $.95?

  9. I’m already driving less. I won’t be trading the minivan I drive in anytime soom as it still has a few years left in it. Although when I do get rid of it I want to go electric. I’m hoping the range will be improved and a broad charging infrastructure will be in place by then.

    Investing tip: Buy stock in companies that provide charging infrastructure. Every parking space will need one soon.

  10. I won’t change my driving habits at all. We already drive pretty minimally for commuters – less than 3 miles to work and our city is quite small so it’s quick to get anywhere. Maybe it gas gets REALLY high we will take Megabus instead of driving to my parents’ place.

    We are trying out a one-car lifestyle so I hope our gas usage will drop a little, although the car we’re using is the less fuel-efficient of the two! That’s not motivated by gas prices but rather the other costs of maintaining and operating a second car.

  11. This is all to a familiar story with gas prices. It seems like they go up every time we are about to elect a new president

  12. I’m curious what date this post was originally written – seems a little outdated now since gas is currently over $4. One reason I like dates on blog posts. :)

    Gas nowadays is between $4.50-$4.75 and I haven’t changed my driving habits. I do like to carpool when I can – we just took a trip to Mammoth which costed about $100 in gas but since we carpooled with two other people, they pitched in $50 which helped a lot.

    1. @Young Professional Finances, This was last week (maybe the week before?). The average gas price is still under $4 nationally. In LA, it’s way more (impossible to find anything under $4.30).

  13. The biggest problem we have is inflation rates are off the charts. The more the federal reserve prints, the worse the economy becomes.

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