Fuel efficiency is one of the main drivers of the Elio Motors project, so naturally, we are constantly monitoring the rise and fall of gas prices. According to CNN Money, gas prices are approaching $3 a gallon nationwide. One way to combat rising gas prices is to consume less gasoline and we aspire to reduce overall gasoline consumption with our vehicle. Rising gas prices have been prominently featured in the news, so this week’s Momentum will look at what causes gas prices to rise, where prices are headed, and what you can do about it.
Why Gas Prices Rise
According to The Balance, there are three primary reasons gas prices increase. The first should come as no surprise: basic supply and demand. Shale oil producers sharply increased supply in 2014, which caused a meaningful tumble in gas prices. Supply and demand also explains why gas prices rise in the spring and summer. As more Americans gear up to hit the road for vacation, gas prices spike.
Commodity traders can also contribute to rising gas prices. By buying gasoline contracts at a set price, they can turn around and sell the contract at a higher price as speculation sets in. Additionally, the value of the dollar has a significant impact on the price of gasoline. As the value of the dollar declines, gas prices grow. According to The Balance, “That’s why oil prices rose between 2002 and 2014. The dollar lost 40 percent of its value during that time…a strong dollar allowed OPEC members to make more money while keeping supply constant.”
Where Gas Prices are Headed
In the short term, drivers can expect gas prices to remain high. Per the US Energy Information Administration, “For the 2018 April–September summer driving season, EIA forecasts U.S. regular gasoline retail prices to average $2.90/gallon (gal), 17 cents/gal higher than in last month’s STEO and up from an average of $2.41/gal last summer.”
In the long term, some forecasters believe that a meteoric rise in crude oil prices is on the horizon. Currently, the price for a barrel of crude oil is hovering in the $70 a barrel range. According to Investopedia, Bank of America expects oil to hit $100 a barrel in 2019. If this comes to fruition, gas prices will likely explode.
What to Do
While obvious, the best and only surefire way to protect yourself against exploding gas prices is to consume less gasoline. As many Americans drive to work, driving a fuel-efficient vehicle will save drivers significantly at the gas pump. In addition to driving a fuel-efficient vehicle, drivers can protect themselves against high gas prices by keeping to a regular maintenance schedule, driving at consistent speeds, and practicing proper tire maintenance.