The price of one gallon of gas is skyrocketing faster than I have seen for a VERY long time. I live in Southern California and have watched the price jump up more than $0.21 in less than 48 hours! Should people be concerned? Absolutely. But here's what I think is more concerning:
“Basics, it's supply and demand, and unfortunately that means rising prices,” said Jeffery Nugent, a professor of economics at USC.
Nugent said there simply aren't enough refineries producing gasoline in the U.S.
“There are some refineries that are closing down, and it seems that it's not a very profitable business,” he said.
As a result, Nugent said gas will only get more expensive as we head into summer.
“I think if we get another couple of blows here and there, or where ever it is, in the Middle East or elsewhere, we could be at $5,” he said. (KABC-TV Los Angeles)
I have heard the old “refineries closing down” routine more than a few times, especially the last time we approached $5/gallon gas almost four years ago. But historically, gas prices trend north as schools let out and families initiate summer vacations in the May/June time frame.
In 2008, we all watched the gallon price shoot up a dollar under three-months time, but that began in May. At the present moment, ARCO is selling unleaded @ $4.19. Last week when I left for Vegas with my family on Wednesday, we paid $3.89/gallon; that's 30% in just 9 days! But I will be surprised if the price shoots over $4.40 by next week…they usually like to spread out their greedy thirst over 1-2 months time to really hit us hard.
In my view, since the petroleum cartel owns and operates the refineries which process their payloads, they have complete control to shut down refineries as a measure to choke consumers and profit therefrom at the pump. Trust me, the current pricing is a shadow of things to come. Not because it's 2012. Not because the world's gonna end in December. It's purely because large profits are to be made from self-serving opportunists and they are literally banking on consumer ignorance and complacency.
So, what can you do about it? Well, for starters, here are my recommendations:
Tip #1. Be wise about your fuel consumption and usage.
Tremendous gas mileage and time efficiency can be saved if you pre-plan your commute and alternate routes. Not only will you avoid traffic and save time, but you will also notice valuable fuel savings as you become a more efficient driver. Be sure the tire-air-pressure is appropriate and that your car's tune-up and oil changes are in good step as well. Air filters, spark plugs, and essential fluid levels will make significant changes to fuel efficiency, so be sure to manage them well. Also, consider walking and biking as a means of transportation to local activities and events.
Tip #2. Create a trend budget
Consider the rising fuel cost trend and factor that into your expenses. For example, as you create and update your budget for the week and month, decide the limits on what you are willing to pay for gas. Then add a buffer of maybe $0.15-0.25 per gallon into your budget. Trust me, this will always help to offset soaring costs ahead of “Oh My Gosh!” moments as you pull up to fill up. It is basically a little fuel savings account. This will prove most valuable if you fully utilize Tip #1 above and continue to responsibly manage your finances.
Tip #3. Safely store a small reserve of fuel if possible.
Some people won't be able to do this because of their living situation such as apartments or condos without car-ports. But for those of you who are able to safely store gas in a appropriate containers and areas, it's a good idea to keep a few gallons handy. This is especially true if you have gas-fueled generators within your supplies. For those whose vehicles and generators use diesel, you'll find real savings with the current prices of diesel shooting up as well.
Edmunds.com offered these pointers in 2007, and they're still relevant today:
- Use wholesale stores to fill up such as Costco and Sam's Club. Even Food4Less has cheap gas prices at select locations where they sell gas!
- Take advantage of Cash Back reward programs with credit cards (but keep in mind that savvy consumers use credit cards for free money, paying off balances within the cycle. The credit card companies don't particularly like that so be sure to know your terms and conditions before using your cards to make sure you won't be penalized for being smart).
- Look for fuel promotions which offer incentives which equal real savings, not having to overspend on a grocery bill to save less than what you overspent at the checkout stand.