Tag Archives: gas

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 GasBuddy.com, 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the shaky state of the economic recovery in the U.S. – are holdover from last year, however, the 2011 Arab Spring has been replaced by the 2012 crisis over increasing tensions between the U.S. and Iran in the Strait of Hormuz, where one-fifth of the world’s oil must pass on its way to the mass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?

Saving Money on Gas Isn’t Always Worth It

There’s an ARCO gas station right by my office that has the lowest advertised prices in the area. It’s always at least 2-3 cents cheaper than the next best place and a solid 7-9 cents lower than what I can find close to home.

The funny thing is that even with the great price, the ARCO station is not my first choice when I fill up at.

Why?

It starts with the 45 cent charge for using a debit card. That sucks and adds another 3-4 cents per gallon each time I fill up.

So why not just pay in cash and get the best rate? Because remembering to take cash out of the ATM each week just to have a bunch of change in my car does not appeal to me!

Even when paying with cash, I still think the smart move is to avoid the station. I’ll use an example to show you why:

At the ARCO station, gas is $3.69 (and 9/10ths of a cent, everyone seems to forget that that means the price is much closer to $3.70 than $3.69) while the 76 station 3 blocks away sells gas for $3.71 (and 9/10ths).

Paying with cash for 12 gallons at the ARCO station costs $44.39 while the debit transaction at the station costs $44.84, a true rate of $3.736, so about 3.5 cents more per gallon.

At the 76 station, 12 gallons cost $44.63, which is better than the cost of using a debit card to pay at the ARCO station.

But there’s one more advantages to going with the 76 station: you can use your credit card, which for me means 1% rewards (and maybe more for you!).

When factoring in the rebate I’ll get, the price drops to $44.18 for a true price of $3.68, even cheaper than the cash price at ARCO!

There are two lessons to be learned here:

1. We’re talking about very small amounts of money. It’s about 15 cents, so maybe a dollar a month at most. Not really a budget buster in my book. Don’t sweat it, choose the station that’s most convenient.

2. Be aware that things aren’t always the way they seem. Sure, cheap gas is great, but guess what? Advertisements aren’t always so cut and dry. The “cheapest” gas wasn’t really so, and when you add in the hassle, it’s actually a much worse deal!

Readers, do you always go with the cheapest option for gas? Would you pay in cash to save 20 cents or is the hassle not worth the savings?