Ask a Nerd: How Can I Worry Less About the Future of Gas Prices?
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When oil markets are complicated (and they always are), stick to the things you can control to keep costs down, like how much you drive and where you fill up.
What’s the short-term outlook on gas prices?
It’s hard to shake the memory of June 2022, when the average price of a gallon of regular gasoline hit near $5.
It was a unique year for several reasons, says Jeffrey Barron, senior petroleum analyst at the U.S. Energy Information Administration.
During the pandemic, several refineries closed or converted to produce renewable fuel, he says. Then, in early 2022, people started to get back out and on the road. Vehicle traffic volume in March 2022 surpassed pre-pandemic levels, according to data from the Federal Highway Administration.
Barron points out that Russia’s invasion of Ukraine, and the trade disruption that followed from imposed bans, added to costs and overall market volatility.
“So you have this sort of supply tightness at the same time that demand was coming back in full force.”
The price of gas has since come down. The national average dropped to $3.14 in mid-December, according to AAA. And EIA’s latest short-term energy outlook projects the average price of regular-grade gas to be around $3.36 in the first quarter of 2023, lower than the year prior.
Why the rosier outlook? Barron cites an expected increase in refinery capacity in the U.S. and abroad, along with a reduction in refining costs.
Why do we feel some price increases more than others?
The rate of change was particularly jarring in 2022, says Barron. When one day you're paying $3.50, and a few months later, it’s over $5, that can take a financial and psychological toll.
The good news is $1.50-per-gallon price surges in the same year aren’t exactly commonplace in the history of gas prices.
On the other hand, we’ve witnessed a whole new level of economic uncertainty since the pandemic started. With so many factors at play, you’ll do right to expect the unexpected when it comes to gas.
What can I do to make the future of gas prices less of a factor in my budget?
Focus on the things you can control, like your financial choices and driving habits, to make your gas money go further.
Take care of the car you have
Price surges in 2022 probably made you wish your car had a cord, but hold fast before you sign up for a car payment. “I typically tell people the cheapest car you’re going to own is the one you have now,” says Jonathan Kiehl, a certified financial planner based in Lancaster, Pennsylvania.
Instead, spend what’s necessary on routine maintenance to keep your current car tip-top, suggests Kiehl. Regular oil and air filter changes, and something as simple as adjusting tire pressure, are easy ways to save money on gas. Minor fluctuations in gas prices will be more manageable if your miles per gallon are up.
Stack errands to avoid unnecessary trips
Need to hit the grocery store today? Plan ahead and use the trip to return that Amazon package and pick up the dry cleaning too. When you stack multiple errands in one trip, you’ll avoid the need to retrace miles later. It may sound simple, but habits like this can lead to lower fuel consumption.
Use membership clubs when it counts the most
Kiehl says it may feel counterintuitive to pay for a warehouse club membership at a place like Costco or BJ’s (i.e., spending money to save money), but the gas savings that come with these clubs can be worth it, especially if you’re already there to shop for other goods. He says his family was saving around 20 cents per gallon at one point last summer.
Some popular grocery store chains like Safeway and Kroger have fuel stations on site in certain locations, where you can cash in on the free points you’ve racked up for food shopping. Kroger’s points also work at participating Shell stations. The key here is to save fill-ups for when your tank is low so you can make the most out of the per-gallon discount.
Check gas prices where you're going
It’s time to stop passively passing gas stations. You’ll do yourself a favor to be mindful of prices on signs. And if you spot a good deal, fill up now to protect yourself from an unforeseen increase the next day.
You can also use a gas app like GasBuddy or even Google Maps to check station prices before you drive. Driving across state or city lines? Check the price of gas where you are and where you’re going. Then, plan to fill up in the town with the cheapest price.
Gig workers and other frequent drivers may also consider a gas credit card that pays a percentage back on fuel purchases.
Ask for a break from commuting
The biggest savings can come from staying off the road. In recent years, demand for work-from-home jobs has increased considerably. If being remote is conducive to your line of work, it may be time to ask for a little flexibility.
“If that's not something that's been broached with the company, I encourage people to have those conversations, just to see if it's an option,” says Kiehl.
The hope is that an employer would be willing to work with you to ease the strain of high commuting costs.
