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Gas prices always hit a spike in the summer, and this year is shaping up to be a doozy with prices likely to pass $4.00 per gallon by Memorial Day.
With fuel costs jumping to such dramatic heights, it might feel like a logical decision to jump ship on your current car for something less thirsty. Smart as that seems, an article published in Forbes proves otherwise.
The truth is, a car that gets a few mpg better than what you’re driving now would amount to a few dollars in savings but nothing substantial to most people.
“Assuming the average consumer drives 12,000 miles per year in a vehicle that gets 20 mpg, an increase of $1.00 per gallon, from $3.60 to $4.60 per gallon as an example, would only result in an approximate increase of $11.50 per week in fuel expenses,” Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book told Forbes.
Moving from a full-size SUV to a something significantly smaller is the only instance where trading cars in favor of fuel economy yields noticeable savings, but it’s important to consider that most people driving larger cars do it for a reason. It will be tough moving the whole family around in a Fiat 500 when you become accustomed to your Chevrolet Suburban.
The move is still difficult to justify if you’re one of the people who bought an SUV just to have one. High-milage hybrid cars come at a premium because of the new technology they rely on. Even if you get lucky and trade that Ford Explorer in for a decent rate, you’re still probably going to pay a lot — both at signing and in installments.
Even if it means buying a couple new handkerchiefs to dab away the tears as you fuel up, it’s probably not cost-effective to make the car trade unless you’re in the market anyway.
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.
Who is going to let a little thing like high gas prices stand in the way of a summer vacation? According to a new Gallup poll, about four out of 10 Americans are. The other six are going to pack up the family, fill up the tank and travel the roads in search of adventure and great memories.
71 percent of those surveyed said they would pay more than last summer to travel. Last year, when average gas prices were around $2.80 a gallon, about 39 percent said they would spend more on transportation when it was time to travel.
When asked about gas prices in the poll, 8 percent said that gas prices were the most important problem facing the country now. Last year, 25 percent of Americans said it was the top problem in the country (at a time when gas prices reached past $4 a gallon), so the latest numbers show that we aren’t as concerned as we were back then.
What about you? Are you still going to travel even with rising gas prices or are you going to enjoy a “stay-cation” this year? Let us know in the comments section below.
[Source: Consumer Reports]
With the average price of fuel in American about ready to hit the $4.00 a gallon mark commuters are driving less to help make ends meet. According to a new poll by Fox News, 62 percent of respondents say they have reduced the amount of driving they have done.
The increased cost at the pump is also sparking many Americans to consider smaller cars, with 47 percent of respondents saying they’d look at buying a more fuel efficient model for their next purchase. This trend is supported by April’s new car sales figures released yesterday, which showed a clear trend towards smaller cars, with vehicles like the Chevrolet Cruze up 50%.
As one would expect, the rising price of a gallon is affecting lower income families more, with 73 percent of those earning below $50,000 say they are driving less, compared to 57 percent of those over the $50,000 mark.
And to show just how much of an effect rising gas prices can have on the average family, 50 percent of those polled from the lower income bracket said they had to give up household necessities to pay for gasoline, compared to 25 percent in the higher income group.
Of course, this poll is not without a political message, with 61 percent of those asked saying they are in support of domestic drilling for oil.
It’s almost a perfect storm. The aftermath of the deadly earthquake in Japan, combined with a dramatic increase in oil prices fueled by the ongoing crisis in Libya and the reduction in domestic stockpiles is pushing up the price of new automobiles in a manner not seen in years.
Already Toyota, Ford and GM have announced price increases for their vehicles, with others set to follow suit. But an interesting trend is the price of small cars. Compared with a year ago, the average price for these vehicles has increased by some 4.2 percent, in the subcompact segment it’s even more – 6.3 percent – according to website TrueCar.com.
Although, given the global nature of the auto business today, companies across the world are facing disruptions, those that are most affected remain Japanese brands. So far, Nippon based companies have delayed the introduction of some 500,000 vehicles because of supply issues resulting from last month’s quake and one industry analyst predicts that amount will grow to some 3.6 million vehicles worldwide by August.
However, this current set of circumstances might provide an opportunity, particularly for Detroit car makers, who’ve been struggling in recent years. In particular, demand for such models as the Ford Fiesta and Chevrolet Cruze, both of which have been well received, could result in some buyers shifting their allegiance from Japanese brands, which have dominated the market for small cars for so long. The situation is likely to exacerbated by the fact that some models, particularly those imported from Japan such as the Toyota Prius, are currently in short supply, a scenario that isn’t likely to change anytime soon.
Nevertheless, although many automakers are rethinking their supply chains as a result of the issues in Japan, it’s unlikely there will be a major realignment in the way parts distribution and production are configured, at least in the short term.
However, given the current economic environment, the auto sector is becoming less of a buyer’s market by the day, particularly for small cars. As a result those consumers in the market for a new vehicle, are likely better off to take the plunge now, while there’s still good deals to be had, rather than sitting on the fence and waiting.
[Source: Detroit Free Press]
On your way to work this morning, did your eyes almost pop out of your head when you saw how much gas was? It’s getting so high that many of us have had enough and are taking to public transportation in record numbers. In fact, in a study released by the American Public Transportation Association (APTA), the way that this trend is going to continue, Congress had better think ahead by investing long term in public transportation.
The APTA has done its homework. They say that once gas prices hit $4 a gallon, 670 million passenger trips could be expected (10.8 billion trips per year). And if that price jumps to $5 a gallon, expect about 1.5 billion passenger trips (11.6 billion trips per year). And, we know you don’t want to even think about it, but what happens when gas gets to $6 a gallon? You can expect the number to soar to 2.7 billion passenger trips (12.9 billion trips per year). That’s a lot of extra trips for public transit to take.
“The volatility of the price at the pump is another wake up call for our nation to address the increasing demand for public transportation services,” said APTA President William Millar. “We must make significant, long-term investments in public transportation or we will leave our fellow Americans with limited travel options, or in many cases stranded without travel options. Public transit is the quickest way for people to beat high gas prices if it is available.”
And the exodus from cars to public transportation has already begun. Across the US, public transit systems are already seeing large ridership increases. Obama’s Administration’s transportation authorization blueprint and proposal will increases public transit investment by 128 percent over the next six years and helps the 46 percent of Americans who do not have access to public transportation. But will it be enough?
If you think more needs to be don, you can let Congress know that there needs to be more transportation options by going to publictransportation.org or text TRANSIT to 86677 and join the “I <3 (heart) transit campaign.”
[Source: PR Newswire]
You think you hate those rising gas prices – well, drivers aren’t the only ones. Automakers aren’t too pleased about skyrocketing gas prices either as they could undermine years of design and manufacturing planning.
Gas prices could hit $4-plus per gallon sooner rather than later, and that could spell doom for automakers. This is due not only to the price of gas, but also materials that make up car components such as steel, aluminum, copper and platinum.
When the price of gas goes up, so does the demand for smaller cars, like in 2008 when gas prices reached all-time highs and so did interest in cars like the Toyota Corolla, Honda Civic and Ford Focus. But when gas prices dropped soon after, these small cars were stuck to gather moss on dealer lots.
And although the gas prices have been rising slower than in 2008, it has still been following the same pattern – it went from 32 percent in January to $4.11 per gallon in July, then fell back to $1.65 by year end. Even though the average U.S. gas price is 25 percent below where it was then, experts are reporting a switch to smaller vehicles.
“We’re seeing consumers quickly shift back to a higher mix of fuel-efficient cars and now trucks are actually starting to slow down,” said Bob Carter, U.S. market brand chief for Toyota Motor Co. “Sixty days ago, we found the opposite happening.”
Would you switch to a smaller and more fuel-efficient car now that gas prices are going up? Let us know your thoughts in the comments section below.