he average price of gasoline has climbed to more than $3.70 per gallon, and the prospect of having to pay $5 per gallon is looming large in the minds of consumers. Already there’s a rising spirit of panic among Americans — and certainly among some media outlets. There are people who will be tempted to dump their current cars for more fuel-efficient models, while others will fall prey to the latest gizmos and concoctions from the auto parts store.
Don’t be one of them.
What makes sense is to think about the way you use your car. Then change your driving habits. If you decide that you need a new car, shop smart for a fuel-efficient model. Strategy is what you need, so we’ve organized a number of sensible measures that will let you ride the rising tide of gasoline prices with minimal distress.
Where Are Prices Going?
Gas prices increased 20 cents over the span of four weeks in February, driven in large part by a growing fear that developing Middle East tensions would result in a substantial oil supply disruption — namely, that Iran could limit passage through the Strait of Hormuz, through which 20 percent of the world’s oil travels. This information comes from Lacey Plache, Edmunds chief economist.
Gas prices are high for this time of year, but remained below weekly highs of $4.17 in July 2008 and $4.02 in May 2011, Plache notes.
Some analysts are warning that gas prices could rise as high as $5 by summer. One of them is John Hofmeister, who was the chief of Shell Oil’s operation in the U.S. from 2005-‘08. Hofmeister is now the head of Citizens for Affordable Energy, a nonprofit advocacy group that he founded. Early last year, he predicted $5-per-gallon gasoline in 2012, and is standing by that prediction. He says that the U.S. is headed for record-high gasoline prices if it continues to produce only 7 million barrels of oil per day, since the nation actually uses 20 million barrels per day.
Put together geopolitics, limited U.S. production and “unprecedented” increased oil demand by China, and the result is higher crude oil prices, Hofmeister says.