Mellody's Math: How to Beat Expensive Gas
March 7, 2005 — -- The price of crude oil surged last Thursday to $53 a barrel -- 45 percent higher than one year ago.
Gasoline prices are expected to jump -- as much as 24 cents per gallon as early as this week. That would put the price of unleaded regular at an all-time high of $2.16 a gallon (Gas was at $2.064 a gallon in May 2004). Currently, the average price is $1.92 a gallon, according to the AAA. However, depending on where you are, gas prices are already as high as $2.24 a gallon, as in parts of California.
The high prices can be traced to high demand in China and India, turmoil in the Middle East, and cold weather here in the United States. Oil prices are up more than $10 a barrel since the start of the year, when the oil cartel, Organization of Petroleum Exporting Countries, officially cut its daily output by 1 million barrels.
As long as demand continues to outpace supply, the price of oil will continue to increase. It would not surprise me if the price of oil rose to $60 a barrel in the coming months -- especially during the summer travel season when use of air conditioning and road trips drive demand even higher.
What Can Be Done?
People can do a couple of things. First and foremost, now is the time for efficiency. Getting lost at over $2 a gallon is no longer just lost time, but lost money as well. Know where you are going.
Additionally, you should:
Pass on the premium: Premium, high-octane fuels aren't necessarily better for your car and can cost significantly more than regular fuel. In fact, such premium fuels don't provide any greater fuel efficiency and many cars are designed to use regular low-octane fuel. According to the automobile association, premium gas accounts for about 20 percent of total gasoline sales in this country, despite the fact fewer than 10 percent of cars on the road were designed to burn the higher-octane fuel.
Slow down: Gas mileage decreases rapidly above 60 mph, and if you drive 70 mph instead of 55 mph you could lose up to 17 percent of your car's fuel economy -- which is how many miles a vehicle actually drives using a given amount of gas on either the highway and in the city. In fact, each 5 mph you drive over 60 mph is equal to paying an additional 10 cents per gallon of gas. To maintain the speed limit and save gas, try using cruise control (if you have it) or just stick to the limit.
Keep your tires filled: Underfilled tires are not only a driving hazard, but they burn more fuel. Keeping your tires properly inflated is an easy way to improve your gas mileage up to 3 percent, which is a savings of $.05 per gallon.
Keep your car properly tuned: Keeping your car in good condition can significantly impact your gas mileage, as a poorly tuned engine burns more gas. Be sure to check and replace the air filter regularly, which can provide a fuel economy benefit of up to 10 percent, which equals approximately 15 cents per gallon.
Empty your trunk: For every 100 pounds of excess weight in your trunk, your car loses 1 percent of fuel economy.
Mellody Hobson, president of Ariel Capital Management (arielmutualfunds.com) in Chicago, is "Good Morning America's" personal finance expert. Ariel associates Matthew Yale and Aimee Daley contributed to this report.