It's that time of year when gas prices rise for absolutely no reason at all other than it’s that time of year. We can gripe about it all we want but, in fact, it’s a ritual regardless of world events. And, it’s a ritual that we have basically no way to influence. But, if we learn why it happens and ways to help keep our personal costs down, we can survive yet another summer—and be better for it.
We have all seen gas prices rise overnight upwards of 10 cents a gallon but if you were pressed, you probably couldn’t explain why. The initial reaction is to blame it on the government or the oil industry conspiring to gouge us of our hard-earned dollars. The truth is, there are easily identified reasons why it happens each year like clockwork.
First, and probably the most obvious, there is a higher demand for gasoline. As we come out of winter each year and shed our parka and boots, Americans just want to get out there and experience what they have been missing for months. And that translates into driving more.
As we drive more, we use more gasoline, and higher demand for any product tends to result in a higher price for that product. This is basic Economics 101.
Something you might not have thought of is a planned refinery maintenance outage. The refineries that produce gasoline have planned, routine maintenance outages which results in reduced capacity and thus, increasing their costs. Again, the concept of supply and demand.
But there could also transportation constraints causing the rise in prices. As we have turned toward more domestic oil production, the new pipeline capacity is lagging behind in ramping-up production. This lag results in higher transportation costs, which adds to the price for gasoline at the pump.
Another more common reason is higher crude oil prices. The price of crude oil fluctuates as much as any stock in the market, and for any of a variety of reasons. We are currently at the highest prices for crude in years. This means it costs more to refine and, in turn, means higher costs to fill your tank.
Finally, there are summer blend gasoline requirements. The Environmental Protection Agency (EPA) regulations designed to control and reduce atmospheric ozone require refiners to produce both "winter blends" and "summer blends" of gasoline.
The switch-over from winter blends to summer blends takes place each spring, and the simple fact of the matter is that it is more expensive to produce summer blends than it is to produce winter blends. Cleaning up the air costs money, and we all have to pay for it.
So now that you know it has nothing to do with conspiracy, what can you do to help keep a few dollars in your pocket? Keep in mind that if gas prices rise to $4 a gallon (or higher!) like they did in recent years, everything else will go up accordingly. That includes our food supply—both to grow it and transport it to our local grocers. Obviously, travel will be more expensive and you will probably see a general rise in prices across the board. The good news is that you can do something to prepare for such a landscape. Here are a few ideas:
1. Switch to a more efficient, high MPG vehicle. If you are in the market for a new car, make sure that fuel efficiency outranks any other feature you are shopping for. You can also trade in your gas guzzler for a used, newer car with better gas mileage. And, if you really plan for it, you can go down to one family car. The savings can be enormous.
2. Look for alternate ways to heat and cool your home. Consider yourself lucky if your home is heated by natural gas or propane. But if you use fuel oil, expect to see an increase yearly. Try adding insulation to your home. Keep your thermostat constant rather than changing all day long. And in the summer, keep the window shades closed during the heat of the day, especially on those windows that face west. The less heat or cool air that escapes or enters the home, the less energy you will use.
3. Check out your green thumb! When gasoline prices rise, so do food prices. Basic necessities like flour, eggs, vegetables and milk will steadily increase. How about a home garden to help combat some of those expenditures? Or try raising chickens? Foraging for nuts or having your own beehive might not be items you need in particular, but they can be a great thing to barter with or sell at the local, weekend fresh food market.
4. For those items that you can’t grow yourself, buy in bulk. Staples like rice, beans, pasta, peanut butter and canned goods can save money as you will have them handy rather than paying the ever-increasing price.
5. After you have mastered your gardening skills or can find a bargain on perishables at the local grocer, learn how to can your own food. This is a skill that used to be passed down generation to generation and has become a lost art. But when jam becomes too expensive to purchase and pickles have just doubled in price, wouldn’t it be great to just pull a new jar out of your cupboard? If canning isn’t your thing, try dehydrating. Also think of the gas you will save by not having to go to the store.
6. Finally, get back to basics—walk or ride a bicycle to your destination. You can hook up a small wagon to the back of your bicycle to bring your groceries home. Think of all the great exercise you are getting as well! Or be creative. If the grocer is too far for a bicycle ride, drive halfway, get your bike out and ride the rest of the way. Then ride back to your car with your newly purchased groceries and drive home. Or, if biking isn’t going to work in your situation, use the city public transportation—bus or train. While their fares will also increase with rising gas prices, it will still be cheaper than driving your own vehicle.
In the end, gas prices will go up again. You can count on it. But understanding the simple concept of supply and demand and preparing for the inevitable makes the event a little less threatening. The goal is to keep those dollars in the bank and don’t fall prey to a situation that causes you to panic.