Gas prices traditionally jump in the summer, but this year, global politics could send the price at the pumps to record highs.
According to several industry analysts, a possible conflict between Israel and Iran could send crude oil prices to above $200 per barrel, which will be reflected in a significant hike at the pumps. Gas prices, in turn, can affect auto manufacturers, as well as the buying habits of consumers.
What is causing the increases in gas prices?
GasBuddy.com tracks fuel prices across North America. It’s an efficient way to see trends in gas prices and how things have changed over time. We spoke to Greg Laskoski of GasBuddy.com to discuss what is sending gas prices up, and what this can mean to you as a consumer.
According to Laskoski, gas prices usually go up around this time but, “this year it’s like [prices are] on steroids. There is a lot of volatility on the price of crude oil, and paired with the uncertainty in the middle east, these prices are rising.”
As a general rule: For every $10 the crude oil price goes up, consumers pay 25 cents more at the pump. To put things into context, current prices of around $4 a gallon come with crude oil prices at about $100 per barrel. If that were to double to $200 a barrel, gas prices could go up to about $6.50 a gallon.
How does this affect car buyers?
With gas prices going up, one might assume car buyers will flock to hybrids or thrifty compacts.
“Gas prices are on everybody’s mind,” Laskoski said, and the hybrid and small car sales are likely to increase as a result. “That’s a short term solution for customers who have the resources.”
Bo Saulsbury of FuelEconomy.gov confirmed this, commenting that when there’s a buzz about gas prices in the media, inquiries for fuel efficient vehicles increase on the site.
Hyundai currently sells four models that get 40 mpg or better: the Accent, Elantra, Veloster and Sonata Hybrid. Derek Joyce, product relations manager at Hyundai said customers “will respond to high EPA numbers” and that prospective buyers “will consider highly efficient models like Hyundai offers.”
Joyce explained that Hyundai, among other companies, can offer cars with high EPA estimates thanks to technological advancements like light-weight steel, direct injection technology, variable-valve timing and more efficient transmissions.
Making such a switch might not be so easy for everyone. Kelly Blue Book recently cautioned readers, saying that “if consumers are planning to purchase one of these vehicles in the next few months, they should not expect dealers to offer significant discounts.”
What can car owners do to save money?
There are a few quick and easy fixes that can yield big savings. Steps like ensuring your vehicle’s tire pressure meets the manufacturer’s recommended PSI and keeping your air filter clean. In fact, improperly inflated tires can reduce fuel economy by about three percent.
“For older vehicles, depending on the engine types, air filters can make a big difference,” Saulsbury said.
Other tips include reducing unnecessary weight, checking your car’s alignment and obeying the speed limit. New or old, those tips are worth taking to heart with any car.