I Believe Consumers Can Affect Gas Prices

Winter is typically the time of year when we use the least amount of gas.  Travel is down because people aren’t doing the amount of vacation travel that happens over the summer, meaning that gas consumption is down.  Since demand is lower, this usually means that the winter sees the lowest gas prices of the year.

Not this year, so far!

I’ve noticed a trend that gas prices start climbing in advance of the summer season earlier and earlier each year.  It used to be that prices would start rising in April and peak around Memorial Day, then level off and start sliding down a bit after the Fourth of July.  The earlier part of those trends moved back a couple of weeks, and this year is no exception.

Gas prices here in Michigan started a pretty big upward trend around the middle of January.  Our normal station bottomed out around $3.29, and over the last month has gone up sixty cents!  That’s right, prices earlier this week stood at $3.89.

Even though we don’t typically spend a lot on gas since I have a very short commute to work (6 miles total each day) and my wife stays at home, limiting her mileage, I still keep an eye on gas prices, and I get very annoyed when I see stations raising their prices to the degree that they have.  I simply have no tolerance for prices jumping up 5-10% at a time (notice that when they do fall, it’s never more than 1-2% at a time?).  Last week, I filled up at $3.49 and when I drove home, the station price was at $3.79.

Virtually nobody else gets away with price flucuations like this.  Imagine if the government were to raise your taxes and adjust those to this degree.  Chaos!  Imagine if your grocery bill went from $75 to $90 over the course of a week for the same basket of items.  No way!  What if the new car you looked at last week for $30,000 was now stickered at $33,000 and the dealer just said ‘Eh, what are you going to do?’  I don’t think so!  And the best one of all, what if your boss came to you and said, here’s a 20% raise.  Enjoy it, but we’ll probably take it away.

Not in a million years!

None of those things happen but the gas prices going up and down and all over the map is somehow supposed to be perfectly acceptable.  It drives me crazy and is one of my hot buttons.  If I see the price go up and up, the first thing I’ll do when I get home is announce today’s price increase.  Then, I’ll go check Facebook or Gas Buddy forums and find…nothing.

Apparently, I’m the only one outraged these days.  Or am I?

It made me stop and wonder, is there any way that we can affect gas prices?

Don’t buy gas on Tuesday

Back when gas was first going through its big run-up a few years ago, people actually were outraged, and at least once a week, I’d get an e-mail proclaiming ‘DO NOT BUY GAS ON TUESDAY!’ Or whatever day happened to hit someone’s hot button.  The rationale is that a day of no sales would drop demand so quickly that prices would have to drop.

I’ve always thought that these were completely absurd.  First, people need gas and are just going to go get gas when they need it, more often than not.  Following this strategy would mean that people would have to fill up earlier than they might otherwise (not likely) or that they’d chance running out of gas (don’t think so).  Besides, nobody did it!  I’d drive by gas stations on so-called ‘Do not buy gas’ days and I’d see as many cars filing up as any other day.

Stop Driving

People say that one way to push down the prices are to drive down demand.  Do this by driving less.  Again, this one sounds great in principle, but it’s probably not going to happen.  When people write stuff like that, they must assume that millions of people get in their cars every day and aimlessly drive around for miles at a time.  If this were the case, then we could all at once cut out these unnecessary trips and gas prices would fall.

Unfortunately, that’s not the case.  While some of our driving could be curbed, the fact is most driving is tied to activities like going to work, going to school, going to the grocery store to buy food for your family, or other trips that simply can’t be cut off.  Delayed? Maybe, but not cut off.

Drive with better gas mileage in mind

Every time gases cross a mark (if they get to $4, just watch these e-mails start), you’ll get e-mails and blog posts talking about how we need to drive to improve our fuel economy.  Don’t gun it.  Coast up to stop lights rather than brake, so that you can perhaps not have to come to a stop, reducing your usage.  Drive 60MPH instead of 70MPH.  We’ve all heard them, but the fact is that people drive as they drive, and any changes like this are only temporary.  You’re not going to turn a speeding, tailgaiting jerk into a Sunday driver just by sending an e-mail.  Not enough to affect gas prices anyways.

Buy more fuel efficient cars

We’ve been improving the fuel economy on the average car for years, but still gas prices have not fallen.  Besides, reports now show that consumers are buying more full size pickup trucks than ever before, so while some focus on economy, by and large, I just don’t think this is a priority.  You’re not going to see the roads in the United States resemble those in Europe (filled with compact cars) anytime soon.  Again, good in theory, but a non-starter from a ‘can we really impact prices’ level?

My Idea: Stay Out Of The Gas Stations

Here’s an idea I’ve been throwing around in my head as the only possible way that I can think of that might actually impact gas stations.  Stay out of the stations!

Note, I didn’t say don’t go to gas stations.  I said stay out of them.  As I outlined above, you still need to buy gas, so continue to do so. But, where I’m going is to buy gas and then leave.

See, it’s a well known fact that gas stations make a majority of their money not from actually selling gas, but they make it from the convenience stores attached to said gas stations.  No gas station is every built these days without a big store attached.  Inside you can find your snacks, your soda, your coffee.  You can get newspapers and magazines.  Need washer fluid or some extra motor oil?  No problem.  Gum, candy, lottery tickets.  You bet.  Even beer and wine at many stations depending on what state you’re in.

It’s all very convenient, but what if we cut off that profit source?

See, gas station owners are well known for saying that they have no control over prices.  The prices are set by the distributors or parent company, especially for company owned gas stations.  I’ll focus on Speedway (or Speedy America depending on where you live) as an example, because they own all of their gas stations.  Speedway is the biggest culprit for raising gas prices with big gaps.  They don’t even pretend to wait for the next batch of gas to come in. They will see that the wholesale prices are going up and they’ll order all stations to do an immediate increase.

Don’t tell me that these stations aren’t making money.

What happens then is that gas stations surrounding Speedway will raise their prices as well.  At least where we live, Speedway is the first to raise prices 90% of the time.  Count on it.

Yet, every time I go in Speedway for any reason, I have to wait in line.  Not for people to pay for gas, but for people buying hot dogs and chips and all the other stuff I mentioned above.  What happens if those people all stopped going in?  What if people went to McDonalds to get their coffee? Or to the drugstore to get their newspaper?  Or…well, you get my point.

See, stations owners might have no control over gas, but I don’t think they actually do much about it when the prices go up.  If customers complain, they shake their heads and say that there is nothing they can do, but do you really think they get on the phone and argue the price increases?  No.

Do you think they might if they saw their convenience store profits cut in half?  I think maybe.

Do you think Speedway, if they saw their coffee sitting their going bad on the warmer instead of being sold, would be as quick to raise prices if customers stopped going into their stores when they decided upon a 30 cent increase for no particular reason?

I’m not going to say yes with absolute certainty, but I’m thinking it could have an effect.

See, if gas stations owners aren’t making money on gas, they really don’t care.  But if you hit them where it hurts, in the store, I believe they would actually take notice.

So, what do you say?  Can we start a movement to speak with our wallets and take the gas station convenience stores off of our shopping list when prices keep spiking up?  Or is my thought another waste of time just like ‘Do Not Buy Gas On’ days?

High Or Low, Gas Prices Stink Either Way

Nothing is certain but death and taxes.

That’s a fairly common adage that I’ve heard for so long.  I really think there needs to be an amendment to that to include the fact that someone is going to be complaining about gas prices, no matter what the cost.

If gas prices go up, the consumers complain.  Nobody likes to pay more for gas than they did at their last fill-up, and when it crosses certain psychological thresholds (e.g. $4/gallon) the complaining gets worse.

So, when gas prices go down, everybody’s happy, right? (Especially the credit card companies that pay rewards for gas purchases)

At that point, then the economists are complaining.  Because low gas prices these days means less demand.  Economists think this means a slowing economy.  Then, Wall Street gets involved and starts selling off stocks because nobody wants to be invested in companies whose stuff isn’t being bought by consumers, and they can all predict this because of the price of gas.

It’s enough to pull your hair out.

It’s almost as if, since gas prices jumped out of the $2 per gallon range and into the $3-4 per gallon range, that they’re in a no-win situation.

As soon as they rise, consumers stop spending in other areas to pay for the gas.  Then, gas falls.  Consumers start spending on other items again. And, the whole mess just goes around in a circle.

How do we get out of it?  Is it possible to have high gas prices as well as meaningful consumer growth?  The last five years have pointed to no end in sight, but there has to be a way.

What is the way out to the cycle that we’ve gotten in with regards to gas prices where either way, the price of gas points to some future bad sign for the economy?

Any thoughts?

Should I Ride My Bike To Work?

I’m fortunate enough to live about two and a half miles from work.  This is great in that my gas costs are significantly lower than they would be if I had a longer commute.  I once had a job that was sixty five miles each way.  Needless to say, the gas costs were through the roof, and gas was less than three bucks a gallon.

Still, I’ve often considered the idea of riding my bike to work once the spring time weather hits in a few weeks.

Since we moved in, riding my bike hasn’t been an option I’ve been comfortable with for the simple fact of the freeway that lies between my house and where I work.  There is an overpass to the freeway that I would have to cross, and the problem was that there was no bike lane or barrier from the road.  While many brave people on bikes did go over the road, I had no such will to ever do such a thing.

Last year, though, they completely re-built the overpass as part of a road widening project.  In doing so, they added a dedicated bike lane that’s separated by a fence and concrete barrier from the traffic lanes.

This means that I could now potentially ride my bike to work.

I would definitely consider it, but I’m curious if anybody else out there has ever undertaken a bike ride to work.

I would probably only do so on days when there was a 0% chance of rain and also when it wouldn’t be overly hot or cold.  Any days where we had something to do would be out of the question.  Still, this could further reduce my costs of gas and wear and tear on the car, as well as give me some needed exercise.  Since there are bike paths and sidewalks the entire path to and from work, there would be a safe path the entire way.

Would it be best to wear appropriate riding clothes to and from work, changing into my dress pants and polo or button-down shirt when I get there?  In that case, what’s the best way to transport those items without having them wrinkled and such?  I already have a backpack type carrying case for my laptop, so that would be pretty easy to manage.

What other things would I have to think of before considering this idea?

Looking For A Good Reward Credit Card For Gas Purchases

At the end of last year, I reported that we were the proud owner of a new camper which will become our main source of vacation time starting this upcoming summer.

A few days ago, I started having a mild panic attack when I looked at the gas price situation and some of the surrounding news.  In Michigan, gas prices have gone up around 30 cents over the past couple of weeks.  It seems every year the gas price rise starts earlier and earlier in the year, and the projections get a bit higher for the summer projections.

This year, people are already talking about $5 gas.  Thinking about the cost associated with towing a camper, it seems that any ‘savings’ we are getting on paying for cheap campground accommodations would be negated by higher gas prices.  The vehicle we tow with gets about 20MPG regularly, and I’m assuming that will drop significantly given that we’ll be towing another several thousand pounds.

I finally calmed down when I realized a few things:

  • We usually do a good amount of driving anyways, so while there will be additional costs due to the reduced mileage and potential higher gas prices, the difference won’t be as bad as I’m probably thinking.
  • I can take this as an opportunity.

This second aspect actually calmed me down and got me a bit excited.

See, right now, we pay for gas and many other regular costs on our Citi Dividends Master Card.  This is a cash back rewards card that offers 1% cash back on all purchases, and 5% cash back on rotating categories that change every three months.  Since there is no annual cost for the card and we pay our balance in full, this is just ‘extra’ cash, which we’ve used to buy new TVs and other ‘luxury’ items that, in essence, become ‘free’.

So, back to the opportunity.

What this gives me is an opportunity to see if there is a better card that I can use for rewards on gas purchases.  Because, I know there are rewards cards all over the place, but because I’ve been satisfied until now with the simple 1%, I haven’t done much digging.

But, since I know I’ll be spending more on gas than ever before, it’s definitely time to start looking.

Here are the things I’ll be looking for:

  • Cash back rewards.  I want to keep it simple.  No ‘points’ or anything else or having to ‘spend’ the rewards with a certain group of retailers.  Show me the money.
  • Rewards for gas greater than 1%.  Unless I can find this, there’s really no value in changing cards or adding another card.
  • Not tied to one particular station.  Our camping journeys will likely take us all around the state and maybe even to other parts of the country.  I don’t want a card tied to one particular station since I have no assurance of knowing what station we’ll be fueling up at on any given trip.
  • No annual fee. I’ve never paid for the privilege of using a credit card, and I’d prefer not to begin doing so now.

So, savvy readers, do you know of any credit cards that fit the bill?  Anything else I should be looking for? 

Gas Prices Keep Going Up, And Nobody Can Say Why

Last week’s gas price report from AAA showed that gas prices went up to a 28-month high.

This was in spite of the following three factors:

  • The price of a barrel of oil has fallen
  • Demand for gas has fallen
  • Supply for gas has risen

Any one of these factors is usually enough to bring prices down or, at the very least allow them to remain steady, and when all three factors are in play is usually when prices go down.

But, that’s not happening.

I think that there is more at play here.  I think oil companies are getting a jump on the spring season by raising prices now.  Traditionally prices start to ramp up in preparation for the summer driving season, but even though we’re still in winter, that trend apparently has kicked off.

Maybe this will mean that we won’t see a big rise in prices around Memorial Day, which is when they often peak, but I’m not holding my breath.

I think there’s a different reason for the price increase.  I believe that oil companies will continue to raise prices as much as they can get away with until it actually starts affecting the economy.  The oil companies know that as long as the economy keeps getting better that they have some wiggle room in which to raise prices.

They’re probably going to continue to test the limits until they decide that there’s a ceiling at which consumers will start ‘cutting back’ significantly.  Until they find that ceiling, prepare to be manipulated and for higher prices at the pump.

Do You Drive Differently Depending On Gas Prices?

It’s interesting to see the ‘flavor of the day’ when it comes to spending and saving money, and the tips that go along with that.

Most of us certainly remember the days a couple of years back when gas was $3 – $4 per gallon.  It seemed that every other personal finance ‘how to’ article was about the best ways to reduce your gas usage.

Now that gas prices are (for the most part) in the $2 – $3 per gallon range, it’s interesting to see how few of these articles actually populate the personal finance blogosphere.

I know that I still try to keep an eye on fuel efficiency, though I will admit that I’m not as regimented about it as I would be when the prices go up.

Still, I try to do things like:

  • keep my tires inflated
  • avoid jackrabbit starts and stops
  • anticipate red lights and coast accordingly

As I said, though, higher prices do definitely make you more aware of your driving habits.

Take, for example, a recent trip.  A few weeks ago, my wife and I were driving to ‘up north’ Michigan for our anniversary.  The total round trip was about 600 miles.

The vehicle we were taking gets around 20 MPG on the highway.  So, that worked out to about 30 gallons of fuel.  In the weeks leading up to the trip, the prices were around $2.65, which would cost roughly $79.50.

Two days or so before the trip, Murphy’s Law hit and some oil pipeline a few hundred miles away was shut down, and prices overnight went up 10% to about $2.95 per gallon.

I couldn’t believe our luck, and re-calculated our gas budget at $88.50, a $9 difference!

Because of the increase, though, I focused a little harder on driving efficiently.  By reducing our trip speed an average of 2-5MPH, we got 21 MPG.  Doing so caused us to use slightly less fuel (28.57 gallons based on the 600 mile round trip).  Although the cost (at $2.95 per gallon) was $84.28 and cost us more than the original budget at the lower prices, paying a little more attention still saved us a few bucks.

I’m all about keeping money in our pocket and out of the pockets of the oil companies, so even though it was ‘only’ $4, I was still happy to make a little change to save the few bucks.