When the oil markets are tough (and they always are), stick to things you can control to keep costs down, like how far you drive and where you fill up.
What is the short-term outlook for gas prices?
It’s hard to forget June 2022, when the average price of a gallon of regular gasoline hit $5.
It was a unique year for several reasons, says Jeffrey Barron, a senior oil analyst at the US Energy Information Administration.
During the pandemic, several refineries have closed or converted to produce renewable fuel, he says. Then, in early 2022, people started getting back 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 the Russian invasion of the Ukraine and the disruption to trade that followed the imposed bans increased costs and overall market volatility.
“So you have this kind of supply shortage at the same time that demand was coming back in full force.”
The the price of gas has dropped since then. The national average fell 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 a year earlier.
Why the more optimistic outlook? Barron cites an expected increase in refinery capacity in the US and abroad, along with a reduction in refining costs.
Why do we feel that some prices increase more than others?
The rate of change was particularly jarring in 2022, Barron says. When you’re paying $3.50 one day, and a few months later, it’s more than $5, that can take a financial and psychological toll.
The good news is that price increases of $1.50 a gallon in the same year aren’t exactly common in gasoline price history.
On the other hand, we have witnessed a whole new level of economic uncertainty since the pandemic began. With so many factors at play, you’ll do well to expect the unexpected when it comes to gas.
What can I do to make future 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 increases in 2022 probably made you wish your car had a cable, but wait before you sign up for a car payment. “I usually tell people that the cheapest car you’re ever going to own is the one you own now,” says Jonathan Kiehl, a certified financial planner based in Lancaster, Pennsylvania.
Instead, spend whatever it takes on routine maintenance to keep your current car in top condition, Kiehl suggests. Regular oil and air filter changes, and something as simple as adjusting your tire pressure, are easy ways to save money on gas. Minor fluctuations in gas prices will be more manageable if your mpg increases.
Stack errands to avoid unnecessary trips
Do you need to go to the supermarket today? Plan ahead and use the trip to return that Amazon package and pick up the dry cleaning, too. By piling multiple errands into one trip, you’ll avoid the need to retrace steps later. It may sound simple, but habits like this can lead to lower fuel consumption.
Use Membership Clubs When It Counts Most
Kiehl says it might seem counterintuitive to pay for a warehouse club membership at a place like Costco or BJ’s (i.e., spend money to save money), but the gas savings that come with these clubs can be worth it, especially if you already it is there to buy other goods. He says his family was saving about 20 cents a gallon at one point last summer.
Some popular grocery store chains like Safeway and Kroger have on-site fuel stations at certain locations, where you can redeem the free points you’ve accumulated to buy groceries. Kroger points also work at participating Shell stations. The key here is to save refills for when your tank is low so you can take full advantage of the per-gallon discount.
Before preparing a budget
NerdWallet breaks down your expenses and shows you ways to save.
Check gasoline prices where you go
It’s time to stop passively passing gas stations. You will be doing yourself a favor by keeping in mind the prices on the signs. And if you see a good deal, fill it up now to protect yourself from an unexpected increase the next day.
You can also use a gasoline application like GasBuddy or even Google Maps to check station prices before you drive. Driving across state or city lines? Check the price of gasoline wherever you are and wherever you are going. Then plan to refuel in town with the cheapest price.
Casual workers and other frequent drivers may also want to consider a gas credit card that reimburses a percentage of fuel purchases.
Take a break from commuting
The biggest savings can come from staying off the road. In recent years, demand for work from home 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 addressed with the company, I encourage people to have those conversations, just to see if it’s an option,” Kiehl says.
The hope is that an employer is willing to work with you to ease the stress of high transportation costs.