Whether you have an hour-long commute or you take your car out only on weekends, you've likely noticed the increase in gas prices over the past year. While there's very little that the average person can do to affect gas prices from day to day, knowing why gas prices are so high is still important.
Here are the major reasons why you may be paying more for fuel for at least a little while longer and what you can do to make your next fill-up a bit more affordable.
Supply and demand
Most everything we pay for is affected by two forces: supply and demand. Fuel is no different, and the perfect storm of a shortened supply combined with much more demand has created very high prices.
How did this happen? There's no one single thing, but the demand for gasoline surged this past spring and summer when many people ventured out for vacations and business travel (some for the first time since COVID). With people traveling, it placed more demand on the fuel supply.
So, what about supply? Just before COVID, the U.S. was producing an all-time high of just under 13 million barrels of oil per day. Where did all the gasoline go?
Again, this is not a simple answer, but the following events really put a crunch on the amount of processed and ready-to-sell fuel that consumers could buy at the pump:
Because people didn't travel much during COVID, the demand for oil dropped (a lot), and producers stopped this all-time high level of production. In May 2020, just 9.7 million barrels per day were produced.
Some oil companies went out of business, leaving some workers to find new jobs in other industries. They never came back.
The smaller stripper wells, which produce no more than 15 barrels of oil per day, are still responsible for 7.8% of U.S. oil and natural gas. Many were capped during the slow months of the pandemic, making them hard to access now that demand is high again.
There are also issues happening abroad. The war in Ukraine has affected oil in big ways since Russia provides 10% of the global oil supply. When the U.S. placed a ban on Russian oil to the States, it further decreased our options.
The U.S. released large amounts of oil from our Strategic Oil Reserve, but OPEC is set to cut the amount of oil it makes available to other countries, meaning we could see prices increase again this winter.
Why don't oil companies just produce more oil? That's complicated, too. It can take a year or more to go from a permit to creating crude oil that can be processed and refined to become the gas you put in your car. With so many changes in regulation and climate policy over the past few years, oil companies may be reluctant to jumpstart expensive operations if they don't think they can make much money for very long.
What can I do about rising gas prices?
Since all of the factors above are very much out of our control, there's little we can do to bring down the cost of gasoline. However, there are some ways to save money on gas:
1. Use coupons
Yes, you can actually use coupons for fuel, although they are digital and not something you clip out of the newspaper. Many of the large grocery chains offer fuel savings programs, giving you up to $.20 off per gallon with purchases of select grocery items. Ask your local store if they participate.
2. Shop the sales
Fuel doesn't really go on sale, but the price between two neighboring gas stations can be very different. Looking up the cost of gas on an app like GasBuddy can help you save up to $.10 per gallon, which adds up when filling up your tank regularly.
3. Map the best route
The fastest point between two places may not be the cheapest way to go. Google maps provides routing options for mileage or speed. If you want to cut down on miles driven, consider the shortest option.
You can also use GasBuddy to map a route, such as a trip out of state, and it will tell you the approximate cost of fuel and the cheapest places to stop along the way.
4. Give your car some TLC
Wasted fuel is a bad use of your funds. Consider this "car care" checklist for using gas efficiently:
If it's been a while since you've had a mechanic look at your car, consider making an appointment (especially if it's not running as well as you'd like).
5. Drive smart
The way you drive also affects your fuel usage. Don't slam on the gas or brakes when stopping and going. Instead, drive smoothly, never speed, and consider using cruise control to keep your driving pace steady.
6. Combine trips
Finally, while you should feel free to come and go, planning out your trips can help you in a big way. Instead of two trips to the store this week, make a list and go just once. You may find that you not only save on fuel, but by being more intentional with your purchases you may spend less on food, too!
Bonus tip: Ask a friend or family member if they want to ride along. You can split the cost of the fuel bill, and both save over driving separately.
Bottom line for fuel savings
If you've noticed your gas expenses climbing up and up, you're not alone. One way to get a handle on spending is to track how much you fill up. By using your Netspend prepaid card, you can keep tabs on every penny and monitor your fuel usage over time. Making some small changes may make the difference in staying within budget, even as oil prices remain unpredictable.
