Gas prices usually spike during the summer driving season, not in December. But right now, a gallon has risen to $3 a gallon in some parts of the country. What's going on here?
The big money news last week wasn’t about holiday shopping trends or Bush tax cuts, but about the skyrocketing cost for a gallon of gas…
- “Regular gas in California is at $3.26 a gallon and rising. An unprecedented – for this time of year – $3 a gallon nationwide average is still possible by Christmas,” predicted the Sacramento Bee.
- “Gasoline prices continue to rise, nudging the $3.30 mark Wednesday on Long Island – the highest since fall 2008,” wrote Newsday.
- “Next spring and summer should see ‘the second highest prices in our lifetime,’ said Tom Kloza, chief oil analyst for the Oil Price Information Service (OPIS),” The Miami Herald reported. “Although he doesn’t expect it to, Kloza said gas could hit $4 a gallon. Gas prices haven’t been that high since July 17, 2008, when regular hit $4.11 a gallon – the highest recorded national price.”
OPIS released its own report last Thursday that contained equally bad news for American drivers. Consumer Reaction To High Gasoline Prices claims, “U.S. pump prices could rally to their second highest level in recorded history next spring.” But more importantly, the study tried to measure the impact of gas prices on the average U.S. family. Here was one disturbing example…
“On a national basis, the average household will spend roughly $305 on gasoline in December 2010, up 13.6 percent from last year but up a whopping 76 percent from December 2008, when consumers paid about $1.65 a gallon. This year’s numbers represent an average 7.4 percent of median household income. That is up 6.5 percent from last year, and compares with a 4.2 percent bite in December 2008.”
So why the high prices all of a sudden? Like many instances in life, there isn’t just one reason. The Wall Street Journal summed it up like this last week: “Global oil demand is slowly rising as the U.S. and other major economies recover. Inventories of oil and fuel stockpiles in the U.S. – the world’s largest oil consumer – have steadily declined from 27-year highs in September. Demand in Latin America and Asia continues to grow as well.”
But the holiday lights seem to have blinded many Americans to the impending price hikes.
Hybrid interest “is cold as the weather,” Orlando car salesman Ian Riding told The Palm Beach Post last week. (It was in the upper 30s in South Florida, a historic low.) “You really have to see an extended period of very high prices before we’d expect a customer trend.”
In fact, Honda is slashing prices on its Insight Hybrid by $1,600 because of soft demand, industry website Automotive News reported last month. “Demand for the Insight has been essentially flat this year, with year-to-date sales of just 17,789, compared to sales of 17,530 units during the first 10 months of 2009,” Automotive News wrote, adding that sales for Toyota’s hybrid have been even worse: “Prius sales have dipped slightly to 115,065 year-to-date from 118,290 during the same period in 2009.”
Regardless of what you’re driving now, here’s How to Save Gas Money This Holiday Season, plus 28 Ways to Save on Gas You Already Know – And Maybe One You Don’t.