Tips for Saving Money at the Gas Pump

April 21, 2008 — -- Just when you think the price at the pump can't get any higher, it does.

U.S. motorists are now paying more for gas than ever before.

American drivers are now paying an average of $3.51 for a gallon of regular unleaded gas, up 12 cents from just last week, according to the government's Energy Information Administration.

The price of gas is up 64 cents a gallon from the same time last year and now tops the inflation-adjusted record price of $3.41 set back in March 1981.

How Are You Dealing With Gas Prices? Tell ABC News.

A recent ABC News/Washington Post poll found that 67 percent of Americans say the price of gasoline is causing financial hardship for them or their families.

Thomas J. Palmer and his wife have taken drastic measures to cut their fuel consumption.

Back on March 20, he took the keys to one of the couple's two cars, put them in water and then stuck them in the freezer. The car has sat dormant ever since.

"We combine visits to doctors whenever possible and walk to stores that are close by," said Palmer, who lives in Marietta, Ga., outside Atlanta. "We carpool to church with neighbors and choose not to visit friends or relatives who live distances away that would require driving."

Palmer is semi-retired and has the luxury of not having to make a daily commute. He and his wife are also lucky that they live within walking distance of a grocery store.

The couple did consider trading in both cars and buying a hybrid instead, but the cost of a new hybrid was too much.

So what is the price of gas these days near Palmer? It has been nearly two weeks since he bought gas and now, "I'm afraid to look," he says.

The price of gasoline is being driven up by high oil prices, which are rising because of growing worldwide demand for oil. Even as demand begins to decrease in the United States and other Western countries, demand continues to grow in developing nations like China and India.

But the picture is more complex than that.

Investors, worried about the stock market and the health of businesses hurt by the problems with credit markets, are taking money out of the stock market and buying things like oil or corn.

Further compounding the problem is that oil is priced in U.S. dollars. As the dollar weakens against foreign currencies, the price of oil goes up for American consumers.

Regular grade gasoline retail prices, which averaged $2.93 per gallon last summer, are projected by the Energy Information Administration to average $3.54 per gallon during the current driving season and could peak at more than $3.60 in June. Diesel fuel prices, which averaged $2.85 per gallon last summer, are projected to average $3.73 this summer.

So what is a driver to do?

The easiest way to save money is to stop driving or at least cut back on how much you use your car. But for most Americans, totally abandoning their cars — or even cutting back like the Palmers did — is not an option.

But there are other things you can do to squeeze a few more miles out of each costly gallon of gas.