With national gas prices averaging $5.00 per gallon at the time of writing this article, it’s no wonder that people are looking for ways to save money at the pump.
So why are gas prices so high right now? Can we expect them to go back down? And most importantly, how can you spend less on gas as prices continue to rise? Read on to learn the answers.
Here’s what we’re going to cover:
- Why are gas prices so high right now?
- What’s being done to reduce gas prices?
- Nine ways to save money on gas
Key takeaways:
- Inflation and the cost of crude oil are two of the primary reasons the cost of gas has been increasing.
- It’s hard to say if and when gas prices will go back down, but steps are being taken by the federal government to help make gas more affordable. Some of these steps include releasing reserve stocks of crude oil, improving diplomatic relations with certain countries, and suspending fuel taxes.
- There are a number of ways you can spend less money on gas, including checking gas apps, paying with cash, leveraging rewards programs, maintaining your car, driving slowly, and reducing how much you drive.
Why are gas prices so high right now?
A couple things are having a significant impact on the price of gas right now: inflation and the price of crude oil.
Inflation is the increase in the price of goods and services over time. Typical inflation rates in the United States run between 1 percent and 3 percent in a year. But according to the U.S. Bureau of Labor Statistics, May 2022 saw an inflation rate of 8.6 percent—the largest 12-month increase in 41 years (since December 1981).
What’s having an even greater impact on gas prices is the price of crude oil, which is at a record high—even after adjusting for inflation. As of April 2022, the cost of crude oil accounted for 60 percent of the price of a gallon of gasoline. The same time last year, crude oil only accounted for 52 percent of the cost per gallon.
So why has the cost of crude oil gone up? Global supply and demand. And it all relates to the Russia-Ukraine war. Russia is the world’s second largest producer of crude oil, and before invading Ukraine, it accounted for about 10 percent of the world’s oil production.
However, since the start of the war, the European Union, United States, and other major economies have imposed sanctions that reduce the amount of oil Russia can export. That means less oil in global supplies, leading to an increase in the cost of oil.
What’s being done to reduce gas prices?
It’s hard to say if and when gas prices will go back down, but steps are being taken by the federal government to help make gas more affordable.
In March, the White House started releasing oil from the U.S. Strategic Petroleum Reserve. This withdrawal allows for the release of 1 million barrels of oil a day and is expected to last six months. By adding this supply to the market, the hope is it will lower gas prices by 10 to 35 cents per gallon.
The Biden administration is also working to improve diplomatic relations with countries that were previously banned from selling oil to the U.S., like Venezuela and Iran. If agreements can be reached with these countries, it could increase the supply of crude oil in the market and lower gas prices.
A bill has been introduced in Congress that would pause the federal fuel tax which, as of January 2022, is 18.4 cents per gallon for gasoline and 24.4 cents for diesel. Some states (Connecticut, Maryland, New York, Florida, and Georgia) have already suspended state gas taxes. And at least 20 other states are considering similar strategies. These temporary reductions or suspensions of gas tax would help to lower the cost at the pump.
Nine ways to save money on gas
Although we don’t know when the cost of gas will go down, there are a number of things you can do to help save money at the pump.
-
Check gas apps
GasBuddy, Waze, Gas Guru, and other gas comparison apps track gas prices and compare rates. These apps can help you find the best gas prices near you.
-
Pay with cash
Some gas stations offer a discount if you pay with cash rather than credit. This discount usually ranges from 10 to 15 cents per gallon, but some save you as much as a dollar per gallon. A debit card sometimes counts as cash, so you may be able to pay the discounted cash prices with your debit card. Be sure to take note of additional fees and how prices change depending on your payment method.
-
Use a cash back or rewards credit card
This tip may not directly save you money when purchasing gas but can put money back in your pocket by applying cash back or rewards to future purchases, indirectly helping you save money when buying gas.
-
Look for rewards programs
Many gas stations offer rewards and loyalty programs where you can earn discounts on gas. For example, BPme Rewards, BP’s gas reward program, can save you 5 cents per gallon at BP and Amoco gas stations when you spend $100 on gas each calendar month. Another example is Exxon Mobil Rewards+, which uses a points-based system to save you 3 cents per gallon on gas, plus 2 cents per dollar when you make purchases at the convenience store or wash your car.
Safeway offers discounts on gas with its Safeway for U™ rewards program, which lets you accumulate discounts on groceries when you use the membership program at checkout. You can then use the discounts to buy gas at either Safeway’s fuel stations or participating Chevron stations.
-
Drive slowly
Maintaining a safe driving speed can help improve the fuel economy of your car, meaning less frequent trips to the gas station. Reducing the rate at which you accelerate in the city and keeping your speed below 75 mph on the highway are two ways to help you fuel up less often.
-
Keep up with regular car maintenance
Keeping your car in top shape will also improve your fuel economy. Everything from having the correct tire pressure to changing your air filters can impact how your vehicle consumes fuel and can lead to savings on gas.
-
Limit your driving
Perhaps the best way to save money on gas is by not driving or driving less. When running errands, try to combine multiple trips into one to save on your overall gas consumption. You can also consider alternate forms of transportation that don’t require you to pay for gas, such as public transportation, e-bikes, electric scooters, or even walking.
-
Carpool
If you must use a car, see if you can share a ride (and gas money) with a friend, family member, or coworker. Some apps like Waze can even help you find people to carpool with. The more people in the carpool, the more money you can save.
-
Opt for regular gas, not premium
Unless your car’s owner’s manual says that premium gas is required for your vehicle, choose the less expensive gas options. You may want to treat your car with premium gas, but it usually doesn’t make a difference to your vehicle—however, it will make a difference to your wallet.
Oportun: Affordable lending options designed with you in mind
Now that you understand why gas prices are so high and know some ways to save money on gas, you can learn about how Oportun may be able to help you if you’re looking for affordable credit options. Visit our homepage to learn about:
Sources:
AAA. Gas prices.
CNET. Gas prices finally dipped below $5. But don’t expect them to stay there.
Consumer Reports. How to save money at the gas pump.
NBC News. Why are gas prices so high, and what will bring them down?
NerdWallet. 5 easy ways to save money on gas.
New York Times. Why gas prices are so high.
The Penny Hoarder. These 7 gas rewards programs take the sting out of skyrocketing prices.
U.S. Department of Labor Statistics. Consumer Price Index Summary.
U.S. Energy Information Administration. How much tax do we pay on a gallon of gasoline and on a gallon of diesel fuel?
Wired. How to save money on gas.
The information in this site, including any third-party content and opinions, is for educational purposes only and should not be relied upon as legal, tax, or financial advice or to indicate the availability or suitability of any Oportun product or service to your unique circumstances. Contact your independent financial advisor for advice on your personal situation.
Personal loans through Oportun subject to credit approval. Terms may vary by applicant and state and are subject to change. If you refinance, you may pay interest over a longer period of time or at a higher rate and the overall cost of your loan may be higher. Loans in NM and WI are originated by Oportun, Inc. California loans made pursuant to a California Financing Law license. NV loans originated by Oportun, LLC. In AL, AK, AR, AZ, CA, DE, FL, GA, HI, ID, IL, IN, KS, KY, LA, MI, MN, MO, MS, MT, NC, ND, NE, NH, NJ, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, and WY loans are originated by Pathward®, N.A.. Terms, conditions, and state restrictions apply.
Ready to build a better future? Apply now.
Personal loans
