Coping with high gas prices
Gas prices hit record highs for the 21st day in a row. Here's how to deal with them.
NEW YORK (CNNMoney.com) -- Are high gas prices here to stay? Here are our top tips on what to expect and how to cope.
This summer gas prices could hit $4.50 a gallon if there is a severe hurricane season and a heat wave in the Gulf region says A.F. Alhajji, an energy economy expert and associate professor at Ohio Northern University.
There's a lot of disagreement about where oil prices are going for the long haul. On the one hand, Goldman Sachs (GS, Fortune 500) and CIBC World Markets recently noted that oil could rise to $200 a barrel in the not-too-distant future but other economists say the run-up in prices is not justified and won't continue at the same rate indefinitely.
Peter Beutel, an oil analyst at Cameron Hanover says the price of oil will hit a peak and will turn lower for a number of years. Economy.com's Mark Zandi also thinks oil will eventually decline back below $100. But it could take some time.
Here's the relationship between oil and gas prices. Generally, for every dollar increase in oil prices, gas prices increase by 2.4 cents. If oil rises $10 dollars, consumers will pay 24 cents more at the pump.
Tom Kloza of the Oil Price information service says that if oil goes to $150 a barrel, we'll pay $4.32 to $4.37 a gallon. At $175 per barrel, we can expect to pay $4.95 to $5.00 a gallon and at $200 a barrel the average retail price for gas could cost anywhere from $5.58 to $5.63 a gallon, excluding hurricanes and other threats to our refining infrastructure.
And keep in mind that prices tend to be higher during the summer driving season. After the summer, gas prices typically fall.
We're already changing our habits. Americans drove 11 billion miles less in March this year than the same month a year ago according to the Department of Transportation. This is the sharpest yearly drop for any month. Plus, cities like San Francisco, Denver and Los Angeles are reporting increases in the number of people using mass transit.
According to Edmunds.com, the single best way to save gas is to change your driving habits. You can improve fuel economy up to 37% right away if you follow the speed limit, limit your acceleration, use cruise control and avoid excessive idling.
Companies know that we're getting hit hard by high gas prices. And some of them are trying gas promotions to get you to spend money. Some auto manufacturers, like Chrysler, are offering new car buyers three years of gas at $2.99 a gallon. Callaway Golf is offering a $100 American Express gas card with the purchase of certain products.
There's even a company that lets you lock in your gas prices. It's called the First Fuel Bank located in Minnesota. For example, if you bought 300 gallons at $2.25 per gallon, then, even if gas prices rose to $4 per gallon, you'll still pay just $2.25 per gallon whenever you fill up, until your fuel bank account is exhausted. This could save you big bucks over the long haul.
Bed and Breakfasts across the country are also offering gas promotions. You'll be able to take $25 off your bill to help with the price of gas. To find out who's participating, check out bedandbreakfast.com. Plus, hotels like Mariott and Hilton are offering gas cards if you book with them