money Could Higher Gas Prices Be a Boost for Your Budget?
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Just today, headlines reported the latest gas price spike (tracked by Triple A) is the largest jump in under 24 hours since June (four months ago). Current average gas costs are now floating in the $3.87 per gallon range according to AAA, leaving many consumers uneasy about the coming weeks and how prices could affect their budgets.
But in light of recent higher gas prices, the higher cost to fill up your tank could help your budget by limiting store trips and travel. Plus, we share a few budget tips on saving extra money at the pump to put back into your savings.
Higher Gas Prices Can Positively Affect Your Budget
One optimistic view of higher gas prices is it could curb your spending by making it more expensive to go places. For example, consumers may be less likely to drive to shopping plazas and other leisure activities when gas prices are high, thus limiting spontaneous purchases.
According to a study by AAA in June 2022, 64% of Americans had changed their driving habits because of high gas prices. The top three changes reported were driving less, combining errands, and reducing shopping or dining out.
How does this save money? There is a tendency for people to overspend each time they go into a store (the “Target trap” that explains social media videos of people going into stores like Target for one or two items but checking out with an entire shopping cart basket full with Joanna Gaines’ lastest Magnolia home collection. We kid, but you know what we mean.) Bottom line: if you stay out of the stores, you should spend less.
Imagine you usually go shopping four times a month and spend $40 each time. If gas prices force that down to twice a month, then the tendency is to spend less. Even though you spend a little more on gas, you may win by building a different habit.
Another significant impact on budgets is travel. According to the AAA study, 29% of Americans postponed vacations because of high gas prices.
Tips for Getting Lower Gas Prices
Even though higher gas prices could perhaps keep you out of stores and more on budget when it comes to spending, also saving at the pump where you can is a smart move. Any money saved is more to put toward bills, vacations, and other goals.
1. Use Free Google Maps to See Lowest Gas Price Near You
If you use Google Maps, you already have access to a feature that tells you the daily price of gas stations near you. Type “gas” in the Google Maps search bar and hit enter, and Google will automatically show the current gas price at local stations.
An alternative is GasBuddy, which will not allow you to compare gas station prices but will save you money if you pay through the app.
2. Enroll in Loyalty Programs: Even 7-Eleven Can Save You Cash
From grocery stores like Kroger to gas stations like Exxon Mobil, several companies offer discounted fuel or fuel points for enrolling in their free loyalty program. My personal favorite is 7-Eleven, which gives you $0.11 off per gallon on your first seven trips and then $0.03 off per gallon for every trip after.
3. Wholesale Clubs Can Save You 5% ($500 Savings a Year)
Wholesale stores like Costco and Sam’s Club often offer members gas prices that could be up to $0.20 per gallon cheaper than surrounding gas stations. Depending on where you live, that can be up to 5% off on gas.
If it costs you $100 to fill up your tank, that could save you $5 each trip to fill up. Over a year, a 5% savings can add up to $260 saved if you fill up at least once a week. The savings climb to over $500 if you fill up twice a week, and even more if you have more than one car in your household.
Through October 16, 2022, Sam’s Club is running a membership promotion where you get a $45 Instant Savings offer (like a coupon) when you sign up for its $ 45-a-year club membership. The coupon gives you $45 off a purchase of $45 or more but can’t be used at the pump; it can get you produce, groceries, and home products that you were going to buy anyway.
Related >> Sam’s Club ‘Free’ Annual Membership Deal is Extended Again!
4. Use Credit Cards to Earn Cashback on Gas Purchases
Many credit cards offer up to 5% cashback on gas purchases — some will require you to activate cashback for that category, while others are automatic. Check to see what your cards offer. Once you know which card offers the most cashback for gas, always use it at the pump.
Why Do Gas Prices Fluctuate?
No one has a crystal ball, but understanding why gas prices change can help you understand where they might go.
The major determinant for gas prices is the price of crude oil. Crude oil is the raw material that comes straight from the ground, and it needs to be refined for commercial use. The price of crude oil fluctuates based on supply and demand.
When demand is low — like when everyone was stuck inside because of the COVID pandemic — prices decrease. But when demand is high, it’s a matter of what supply looks like.
Supply depends on how quickly and easily crude oil can be refined and then delivered to gas stations. That is why events like war can raise the cost of gas; between import bans, transportation disruptions and other commerce interruptions, it’s harder to keep the same amount of oil on the market and get it to its final destinations efficiently.
The other costs that go into gas pricing include refining costs, taxes, and marketing and distribution. But these factors tend to be more stable than the price of crude oil, so the latter tends to be the main variable and the reason we see price changes at the pump.
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