In an article released earlier this week by the Associated Press, it was estimated that gas prices could fall by more than 50 cents a gallon this summer. While this is certainly welcomed news, it doesn’t suggest just how high has prices can become by the end of the year. During a typical year, gas prices surge during the spring, rescind during the summer, then slowly creep their way higher during the fall and winter months. With regular unleaded gas prices currently averaging $3.96 across the country, the question is, will gasoline reach $5 a gallon before 2011 is out?
The simple answer is no, it shouldn’t. With average gas prices expected to fall to $3.50 by summers end, the odds that gasoline will increase by 40% in just six months is terribly unlikely. That’s not to say that some areas of the United States won’t experience $5 a gallon fill ups, but as a whole, the average price of gasoline at the end of the year will be similar to what you see now. $4 a gallon.
The Cost of Gasoline Each Year
Depending on how often you drive your vehicle, the cost of gasoline could be of serious or no consequence. Assuming for a second that you drive your car 10,000 miles this year, and your automobile averages 25 miles a gallon, that means 400 gallons of gas will be purchased. At $4 per gallon, the total cost for fuel each year would be $1,600. Increase or decrease any of these variables and the cost of your gasoline each year can vary greatly. In fact, I think the above estimate is conservative and most Americans will spend more than this in 2011.
But as bad as you think you have it, know that in comparison, The United States actually has pretty cheap gasoline. Most European nations pay much more than $4 a gallon for gas and we’re not talking pennies here. Norway tops the list as the most expensive, consistently paying around $10 a gallon and countries like Denmark, Germany and Italy are paying $8 per gallon of regular gas. On the opposite end, many countries do pay less than we do, and if you live in the Middle East or northern Africa, gas prices can be as low as $0.50 a gallon. Even Venezuela benefits from cheap gasoline, generally because it is subsided by local government.
How To Decrease Your Gasoline Costs
As gasoline prices continue to increase, there are a few steps you can take in order to reduce the burden these rising costs have on your budget. Two of the below suggestions are quite practical and one is a bit extreme.
Own a Gas Rewards Credit Card – Many credit card issuers are receptive to the fact that gas is one the rise and are enticing customers by offering increased gasoline rewards. Some cards offer up to 5% cash back on ALL gas purchases so while Americans are paying $4 a gallon, you could be paying $3.80. Over the course of an entire year, that’s a savings of more than $100 and some of these cards offer cash bonuses just for signing up. Check out our regularly updated list of the best gas rewards credit cards.
Use Public Transportation More Often – In some instances, using public transportation rather than driving to your destination can be a real money saver. Not only will you reduce the amount of money you spend on gasoline, you’ll also reduce the wear and tear on your automobile, saving you money in the long-run. This method is not ideal in all situations, especially if you have a long commute to work but for anyone living in a big city, this is a must.
Live Without Your Car or Truck – The third and final suggestion I can bring to the table is to dump your automobile altogether. Selling your car or truck will result in an instant windfall and the savings you’ll see each year will be in the thousands. Without having to pay for upkeep, gasoline or unexpected emergencies, your budget will be a lot easier to balance each month and the only added expense will be from public transportation. This option of course is only for consumers who don’t need an automobile to earn a living.
Anytime I watch the news (which is rare), I’m always provided a report on how out of control gas prices have become. Fortunately for a guy like me who works from home and leaves his apartment once a month, the increased cost of gasoline has no effect but for anyone who travels often, this can be a crippling expense. Make sure you take all the necessary steps and lower your gasoline intake. You’ll not only be doing the environment a favor, you’ll also be improving your finances.Topics: Financial News