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.
Market Trend
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?
I have been thinking about getting rid of my old (17 & 15 y.o.) cars. I have been thinking very hard about hybrids too. I just can’t justify a new(er) car just for the gas savings. My current cars are Hondas and average in the mid twenties MPG. I am holding until the right time.
Overall I think it’s sensible to use less gas but in terms of cost savings, that transition must be made when the changeover premium is best for me and not the dealer. I like your strategy KC.
You can get a Nissan Leaf! We’ll just try to drive less this summer. Gas is already $3.99 here. I predict it will hit $4.50 by June.
We’re gonna hit my $4.96! Just wait and see!
Yep, that’s where we’re heading.
I’m not too sure. If the fed keeps printing money, commodities might get pretty expensive.
It will be interesting to see how things play out. If there is another global economic contraction then commodities in general may fall back, but oil doesn’t always behave like we expect. Thanks Rick.
A hybrid may make you feel good, but isn’t necessarily more environmentally friendly than a gas based vehicle. A fair comparison would be to look at the carbon footprint. Not discouraging those who buy Hybrids (I’m not one of those loony climate change deniers!), I think it is great there is so much interest and environment awareness, but do look at the overall picture.
I like the carbon footprint approach too. My main argument here is transitionining to fuel efficiency on your terms; by not bankrupting yourself in the process. I don’t think any of our readers are climate deniers, ha!
In the LA area, we’re already seeing $4.33 for regular. So I’m gonna now predict we’re going to see gas at $5.03 sometime soon. We just paid off our Element, so we’re not trading it in anytime soon, even though the gas mileage isn’t great.
California and L.A in particular definitely pay a premium compared to the average. Even at $3.59 here we’re already making decisions to drive less. It doesn’t make all that much difference financially, but it makes us feel better that we’re doing something. Elements are cool!
I think it is pretty tough to gauge how high gas is going. In reality, a lot of it depends on the uncertainty around Iran and the Straight of Hormuz. I’m hoping we are getting closer to the peak, but I fear it could spike fast.
Definitely. The current price is based on perceived threats, who knows what will happen when there’s an actual event?
Right now where I live (wyoming) we are hovering under 3 dollars a gallon, and i’m happy with that. we were down under 2 for a bit a few months ago, but it seems to have inched back up. As far as what to do about high gas prices you can buy a different car, or you can find a place to live that is near your place of employment and totally insulate yourself (mostly) from gas price changes.
Thanks Jeff.
My guess is $4.60. I think Saudia Arabia’s increased production will keep us below $5 this year. But, it’s only a matter of time…
We pay a $4 for a gallon of milk and the input costs are way lower….I’m going to catch some heat for this, but $5 for gas seems fair to me.
I love hearing from people who trade a $10,000 car for a $30,000 one because it will save them $1000 a year on gas.
Gas is getting close to $4 where I’m at. To the moon we go…
Get a informative information. The article and comments make me aware of the gas rates. Its quite interesting.
We’re not quite pushing $4 a gallon yet but I’m sure we’ll get there soon, especially at the beach during the summer. Gas is usually atrocious during the summer. I think it’s hard to predict where it’s going to go but I think the predictions of $5 gas are way off. This is exactly what happened a few years ago; people changed their habits and prices went down (I realize there were other reasons for this). Sadly, those habit changes didn’t stick as gas prices dropped.
I expect gas to keep going up. Our car gets decent gas mileage but when the time comes to get a new car I’d like to get one with even better gas mileage.
I don’t see gas prices reversing course anytime soon. Here, I paid almost $4 per gallon today and it’s still March. Wait until the weather gets warm!
Agreed on the sell high, buy low concept. I’ve heard of people making a profit driving hybrids for a period of time and then selling them for more. Pretty smart move!