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.
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.
Here are some tips from the Federal Trade Commission that should put a few extra dollars in your wallet.
Choose the right octane. For most cars, the recommended gas is regular octane. Using a higher octane gas than the manufacturer recommends offers no benefit, and it costs you at the pump. Unless your engine is knocking, buying higher octane gas is a waste of money.
Stay away from gas-savings gadgets. Be skeptical about any gadget promising to improve your mileage. The Environmental Protection Agency has tested more than 100 such devices -- including "mixture enhancers" and fuel line magnets -- and has found that very few provided any benefits. Those that worked provided only a slight improvement. Some can even damage your engine.
Stay within the speed limit. Gas mileage decreases rapidly at speeds above 60 mph.
Avoid unnecessary idling. It wastes fuel, costs you money and pollutes the air. Turn off the engine if you anticipate a wait.
Stop and start gently. You can improve in-town gas mileage by up to 5 percent by driving gently.
Use overdrive and cruise control. They improve fuel economy when you're driving on the highway.
Inflate your tires. Keeping your tires properly inflated and aligned can increase gas mileage up to 3 percent.
Keep your engine tuned. Tuning your engine can increase gas mileage by an average of 4 percent.
Change your oil. Clean oil reduces wear caused by friction between moving parts and removes harmful substances from the engine. Motor oil that says "energy conserving" on the performance symbol of the American Petroleum Institute contains friction-reducing additives that can improve fuel economy.
Replace air filters regularly. Replacing clogged filters can increase gas mileage up to 10 percent.
Lose the junk in your trunk. An extra 100 pounds in the trunk can reduce fuel economy by up to 2 percent. Removing nonessential stuff can save you at the pump.
Combine errands. Several short trips taken from a cold start can use twice as much fuel as one trip covering the same distance when the engine is warm.
Consider carpooling. Many cities make it even easier by matching up commuters.
Bus it, bike it or hoof it. Why not leave your car at home and consider public transportation, a bike ride or a stroll across town?
With reports from Charles B. Herman.