The price of gas is rapidly increasing, this much is clear. The best way to respond to this is far less certain. While there’s no shortage of gas-savvy tips circulating please don’t be suckered into trading your gas-guzzler for a hybrid, at least not now.
There’s no question that conservation is the first sensible action towards consuming less gasoline. When you simply can’t drive any fewer miles due to work or other commitments then switching to a more fuel-efficient vehicle seems like a logical choice. Depending on the efficiency differential you could reasonably double or triple your gas mileage and save money on gas.
If you think this is a smart gas-guzzler upgrade then you’re not alone. Interest in hybrid and other fuel-efficient vehicles is up 15% compared to this time last year according to TrueCar.com, predominantly due to rising gas prices. They forecast this segment to grow by 20% overall for the year compared to just 8% for the entire market.
Sell High, Buy Low
However, a knee-jerk reaction to prematurely trade your car based on fuel consumption alone is not necessarily smart. Like a rookie investor sells stocks in a down market, so too does the panicked motorist. Market demand for fuel-thirsty vehicles is low during these high fuel price periods. Selling now would almost certainly result in a low price for your car, and major dissatisfaction.
Relax, ride out the price spike and hold on to you car until it has exhausted its normal life. Wait until gas prices moderate and fall back a little and then upgrade to a more fuel-efficient vehicle. It costs money to change your ride at the best of times so why make matters worse by letting market forces work against you? Plus, you won’t find many discounts on the most fuel-efficient vehicles right now because everyone wants one.
Sell when the market gives you the best price and purchase your greener car at a discount.
How High Will Gas Prices Go?
Here’s an update on our Gas Price Poll from earlier this year. Financially Consumed readers collectively predicted a national average price per gallon maximum of $4.17. Gas Buddy predicted prices would peak around Memorial Day (May) at $4.15. The chart below clearly shows the trend line indicating a May price of around $4.15, so the Gas Buddy prediction looks to be accurate. However, there is considerably less certainty as to exactly where gas prices will peak. We’ll re-visit this poll again through the year to contrast our predictions to actual gas prices.
Where will we peak? What’s your prediction?