AUG 08, 2022
Learn what you can do to budget and plan for higher gas prices at the pump.
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You’ve probably noticed already, but the cost of gas is on the rise. In the early summer of 2022, we saw prices hit record highs for the US. Despite many of us searching for ways to find cheaper gas, those high prices have since shown little signs of relief. With this in mind, it’s more important than ever for vehicle owners everywhere to know how to save money with fuel prices increasing. Let’s talk about some ways you can save at the pump.
Gas prices started making headlines when they hit a certain threshold. We saw this happen in the US during the early summer of 2022 after gas prices topped a record-high, nationwide average of $5 per gallon in June. Since then, there have been plenty of questions about why fuel prices get so inflated and what we can do as drivers to still get around while budgeting for these changes.
The majority of vehicles on the road are powered by gas or diesel. The gasoline we use is produced in the US by petroleum refineries, who use crude oil and other liquids in the production process. However, the increasing cost of the crude oil needed to supply those refineries is where most of the price changes enter the market. For example, in October of 2021, a barrel of crude oil was priced at around $77. Just several months later in May of 2022, the price increased to around $108 a barrel.
The 28% price change in just a few months was felt across the entire fuel production spectrum since profits are based on production margins. These price increases are passed all the way down to consumers as drivers at the pump pay more for gas. This fact makes price changes hurt more than ever with you having fewer dollars to save or to use for other expenses.
See if refinancing your car loan will help! Check to see if you can put cash back in your wallet. On average, Caribou customers save $100+ a month*.
It’s true that nearly all of the gas sold in the United States is produced domestically. But, like we just talked about, there are numerous factors that can impact fuel prices, and these can stem from abroad as much as at home.
Let’s take a more detailed look at summertime 2022 as an example. There were two key factors in play during this time that led to the increase in gas prices. The Russia–Ukraine conflict has seen numerous sanctions imposed on the Russian government by Joe Biden’s administration, among a plethora of other world leaders, in an effort to isolate them from the world. The shutdown on imports of Russian oil, natural gas, and coal – and thus reduction in supply – has seen global oil prices explode upwards, directly impacting US fuel costs.
The other key factor is the disruption caused by the coronavirus pandemic. Initially, oil suppliers decreased production to meet reduced demand during 2020 and early 2021. But once lockdowns eased, and demand surged, these companies were unable to keep up and so prices rose. A simple case of supply and demand economics.
There are also other reasons why there might be higher gas prices in the US. The global state of the dollar, for instance, can provide either greater or lesser buying power for imports, depending on its strength in comparison to other currencies. Regional prices may fluctuate across states in the US too, depending on factors like transportation, regional supply disruptions, and retail competition. These circumstances can impact fuel prices locally resulting in price differences between states, cities, and major transportation hubs.
Dealing with this volatility is key to ensuring you remain on top of your finances. Don’t expect prices to return to normal or hedge your bets on the oil supply situation improving. By preparing for the worst and planning ahead, you’ll stand the best chance of riding out the rising cost of gas with minimum impact to your finances.
It could be a good time to reexamine your fuel budget, if the gas price hike looks like it could have negative implications for your household income. Look at your expenses over the next six to twelve months. You can often base these numbers on your historical costs plus factoring reported inflation.
Then specifically factor in the increased cost of gas to help you better manage your fuel expenditures. Keep in mind the relevance of doing this will depend on things like your driving habits. Your gas use may have a larger impact than you realize if you commute by car on a regular basis or travel to the store often.
If you regularly need to use your car to drive longer distances and cannot afford the increased gas cost, you have a few other options to consider. One option is to invest in a more fuel-efficient vehicle. This could be a good idea if you can afford to change cars. While the up-front, short-term cost may appear to have a larger impact than the gas use-related savings, could see the savings balance out in the long term. The number of miles you’re likely to put on the car and a reduction in the amount you might pay per gallon for gas can pay large dividends.
Another option is to limit the amount you drive, as well as the speed at which you drive. This can help save gas and offset gas costs over a period of time. Alternate transportation methods like walking or biking to the grocery store along with carpooling with other drivers for your daily commute can reduce your driving miles.
When it comes to car speed, slowing down while driving really does help. According to a US fuel economy study, for each 5 mph you drive above 50 mph, you’re paying an extra $0.30 per gallon of gas than you would if you were driving at 50 mph. Gas costs add up even quicker at higher speeds, so it is best to slow down.
On average, Caribou customers save $100+ a month* when refinancing their car loans! See if you can put money back in your pocket for gas expenses.
Fuel is worth budgeting for like any regular financial expense. If you can create a budget entirely for your gas, then you have more visibility and control over how much you are able to spend. Use these simple steps when budgeting for your fuel costs:
Identify your likely monthly gas expenditures
Record your gas expenses to tally them up against your predicted spending – this will help you adjust if necessary
Identify other budget areas where your spending could be reined in slightly to account for the increase in gas prices
Remember to account for your vehicle’s miles per gallon and fuel tank capacity when calculating your gas expenses.
Think about how and where you drive so you can plan your trips ahead of time. By doing a little research and mapping out your route, you can save on gas expenses. Here are a few tips for reducing your fuel costs while travelling:
Plan your route in advance. If you can map out your trip before you hit the open road, you'll avoid making unnecessary stops and reduce the amount of gas you use. To plan the best route, use a trip planner app like Google or Apple Maps which will outline the shortest and most cost-effective routes.
Avoid peak travel times when possible. If you can travel during off-peak hours, you'll save on gas costs.
Combine trips whenever possible. If you're going on a road trip, try to make as many stops as possible along the way. You may also be able to do things like combine a school run with a trip to the grocery store instead of taking two separate trips during the day.
Check local gas prices with a gas savings app to show you where the nearest and cheapest gas stations are.
Following these tips will make your saved gas dollars add up, and they could end up making a big difference to your monthly budget.
If you’re a daily driver who is already driving a fuel efficient vehicle and planning out your trips, there are other ways to save money when buying gas. You can start using a gas card which specifically gives you reward points for fuel purchases. Programs like GasBuddy offer credit cards which help you earn cashback when buying gas. You can use it at any gas station which accepts MasterCard credit cards and earn discounts on a per-gallon of gas basis.
Other membership cards are available which can help you save money on gas. Chains like Costco or King Soopers offer similar loyalty discounts — usually shaving off a few pennies at their store gas pumps compared to standard gas stations. Don’t forget you can also save money on groceries using the same card for more discounts!
Alternatively, you can open a credit card account with a provider that offers a percentage back on gas purchases. Ask your local bank or credit union if they offer these programs.
Those tips should get you started on your journey to save money on gas. There are always other ways to cut vehicle-related costs and help add more money back into your monthly budget. You can try cutting out membership based expenses like car wash subscriptions or lowering your insurance mileage (if applicable to your driving situation). These things can also help you save money each month and shave off some of the excess “nice to haves” from your monthly budget.
You may also be able to save money through your car loan. If you feel like you are paying too much on your car payments, check to see what your new refinance rate would be. Your refinanced car loan has a new interest rate and term, so you can potentially lower your interest rate and pay the lender less money each month. That puts that cash back into your budget for gas or other expenses.
Thinking about refinancing your car? Caribou provides a fast and easy way for you to see refinance quotes. Pre-quality in minutes with rates as low as 2.32% APR**. Check to see if you can save on your car payments.
You can also try saving on gas by getting away from gas powered vehicles entirely. There are various other ways to power a car including natural gas and electricity. According to the US Department of Energy, natural gas powers more than 175,000 vehicles in the United States and roughly 23 million vehicles worldwide.
Electric vehicle usage is also on the rise. The electric car manufacturing revolution is well underway with brands like Tesla bringing electric vehicles into the mainstream auto markets. While electric cars are usually more expensive to purchase than traditional vehicles, they present a way to avoid increasing gas usage,
When gas prices rise, it is best to prepare instead of panic. There are plenty of options available to you that can help you deal with even the most exponential cost increases. Make the most of the situation through savvy budgeting, prioritizing your car usage, and looking at the additional ways to save on your finances with things like refinancing. These things should get you on your way to feeling more secure in facing increasing gas prices at the pump.
* This information is estimated based on consumers who were approved for an auto refinance loan through Caribou on or after 1/1/2022, had an existing auto loan on their credit report, and accepted their final terms. As of 9/27/2022, borrowers who refinance save an average of $111.16 per month. Refinance savings may result from a lower interest rate, longer term, or both. There is no guarantee of savings. Your actual savings, if any, may vary based on interest rates, the repayment term, the amount financed, and other factors.
+ To check the refinance rates and terms you qualify for, we conduct a soft credit pull that will not affect your credit score. However, if you choose a loan product and continue your application, we or one of our lending partners will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
++ Social security number is required should you choose to move forward in the loan application process.
** APR is the Annual Percentage Rate. Your actual APR may be different. Your APR is based on multiple factors including your credit profile and the loan to value of the vehicle. APR ranges from 2.32% to 36.00% and is determined at the time of application. Lowest APR is based on loan amount of $45,000 and is available to borrowers with excellent credit and only in certain states. Advertised rates and fees are valid as of 8/5/2022 and are subject to change without notice. Lowest rate of 2.32% APR only available with a 36-month repayment term. Insurance savings will not result from lower APR.
Terms and Conditions apply. Caribou reserves the right to modify or discontinue products and benefits at any time without notice. Participating lenders, rates and terms are also subject to change at any time without notice. The information you provide to us is an inquiry to determine whether our lenders can make you a loan offer. If any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. We do not guarantee that you will receive any loan offers or that your loan application will be approved. If approved, your actual rate will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Offers not available in MA, MD, MS, NE, NV, WI, WV.
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