Financial Literacy: Why gas prices are spiking and what you can do about it




Why gas prices are spiking and what you can do about it

Contributed article by : Beverly Wilks – Financial Education Advocate and Blogger at Bacon & Heels


I just put in $60 of gas in my car and the gas indicator just made it to the ½ tank mark. Over the past few weeks gas prices across North America has skyrocketed. In fact, this week, the average weekly price of retail gas hit an all-time high of $4.983US a gallon for regular gas ($2.10 a liter in Canada) , while mid-grade is at an average of $5.381 ($2.21 a liter in Canada) premium at $5.679 ( $2.42 per litre in Canada).


But why is this happening? Why is gas up when many people are still not driving as much as they were before the pandemic? These questions are really intriguing to me because usually gas prices fall in the Winter (when we typically are not moving around a lot) and rise in the summer (when many people are taking vacations). But as we all know, the last two years has been anything but normal. So here is some insight as to what is happening with gas:


CRUDE OIL’S IMPACT ON GAS PRICES

The main reason for gas prices spiking is supply and demand. Many people are back to work and getting back behind the wheel of their cars and this combined with domestic supply interruptions have impacted the price at the gas pump.


In 2020 when the world started to close down in response to the Covid -19 pandemic, many countries did not need crude oil- people weren’t driving, factories were postponing production and many consumers cancelled their air travel plans all these items impacted the demand for crude oil and the price for oil dropped.


In order to limit lost revenues, OPEC decided to cut daily output in April 2020 by 10 million barrels a day from 35 million barrels a day. Since then, OPEC hasn’t increased its oil production to pre-pandemic levels, eventhough the demand for oil is increasing.


WHAT CAN YOU DO? START BY PRACTICING FUEL EFFICIENT DRIVING

I think that we are in this higher gas phase for a while. Economists are predicting that gas prices will continue to rise until the end of 2022. So how do you manage your budget, home consumption, driving habits to get ahead of this?


Top 5 fuel-efficient driving habits:


Fuel-efficient driving can save you hundreds of dollars in fuel each year, improve road safety and prevent wear on your vehicle. Check out these 5 fuel-efficient driving techniques (Source: NRCC and CAA) that can help you to lower your vehicle’s fuel consumption and carbon dioxide emissions by as much as 25%.


5 FUEL-EFFICIENT DRIVING TECHNIQUES THAT YOU CAN IMPLEMENT TODAY

  1. ACCELERATE GENTLY The harder you accelerate the more fuel you use. In the city, you can use less fuel by easing onto the accelerator pedal gently. To be as fuel-efficient as possible, take 5 seconds to accelerate your vehicle up to 12 miles (20 kilometers) per hour from a stop.

  2. MAINTAIN A STEADY SPEED When your speed dips and bursts, you use more fuel, and spend more money, than you need to. Tests have shown that varying your speed up and down between 46 and 52 miles per hour (75 and 85 km per hour) every 18 seconds can increase your fuel use by 20%. Consider using cruise control for highway driving, where conditions permit. Be mindful, however, that little variations in speed can actually be good when gravity does the work. Where traffic patterns permit, allow your speed to drop when you travel uphill, then regain your momentum as you roll downhill.

  3. ANTICIPATE TRAFFIC Look ahead while you’re driving to see what is coming up. And keep a comfortable distance between your vehicle and the one in front of you. By looking closely at what pedestrians and other cars are doing, and imagining what they’ll do next, you can keep your speed as steady as possible and use less fuel. It’s also safer to drive this way.

  4. AVOID HIGH SPEEDS Keep to the speed limit and save on fuel! Most cars, vans, pickup trucks and SUVs are most fuel-efficient when they’re travelling between 31 and 49 miles per hour (50 and 80 km per hour). Above this speed zone, vehicles use increasingly more fuel the faster they go. For example, at 74 miles per hour (120 km per hour), a vehicle uses about 20% more fuel than at 62 miles per hour (100 km per hour). On a 15 mile trip (25-km trip), this spike in speed – and fuel consumption – would cut just two minutes from your travel time.

  5. COAST TO DECELERATE Every time you use your brakes, you waste your forward momentum. By looking ahead at how traffic is behaving, you can often see well in advance when it’s time to slow down. You will conserve fuel and save money by taking your foot off the accelerator and coasting to slow down instead of using your brakes.

SUMMARY

As we navigate this high gas situation, by driving more efficiently you can help stretch that gas that is in your car and here are a few additional tips to help you save money when filling up at the pump·

  1. Plan ahead and do some research to save cash at the pump – use the GasBuddy app to help you get the best price

  2. Join a fuel rewards program to help give you a little extra savings

  3. Plan when you fill your car with gas

To learn more about Beverly and Bacon & Heels, read the "Power 5" interview that we did with her in September 2021 - you can read the full blog post HERE.


Thank you for your contribution Beverly!


Contributed article by Beverly Wilks, tech marketing executive, financial literacy champion and blogger at Bacon & Heels.

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