If you’ve paid attention when you pull up to the pumps, you know that gas prices have been on the rise as of late. But why?
Money expert Clark Howard says there are three reasons why you’re paying more to fill up your car these days. And he has a prediction of when gas prices will start to fall.
3 Reasons Why Gas Prices Are Rising
Let’s dive into why gasoline prices are surging.
1. People Are Driving More
Millions of Americans who spent most of last year at home are now getting back on the road.
57% of people who responded to a recent Cars.com survey say they’re planning a road trip this spring. That’s up from 32% last year.
Demand for gasoline is on the way back up, while the reason storms in Texas have tightened supply. That’s according to AAA, which cites a 14% rise in gas prices between February and March.
2. Exploration and Drilling Declined Drastically During the COVID-19 Pandemic
Facing an oversupply of crude oil due to the effects of the pandemic, Clark says the major producers “shut down their production and exploration. This didn’t just happen in the United States, it happened elsewhere.” Clark says.
But things are now going in the other direction. “We are going to generate significantly more oil every week,” he says. “It’s already started and we will continue to do so.”
3. OPEC is Manipulating the Market
OPEC is “manipulating supplies right now to try to push prices up,” Clark says.
This assertion is backed by the U.S. Energy Information Administration, which says that the oil cartel’s member nations and its partners have been producing less crude oil of late, causing prices to spike.
OPEC met in early March and has more meetings scheduled soon so more adjustments may be forthcoming.
When Will Gas Prices Go Back Down?
Here’s the good news for your wallet: Clark doesn’t expect gasoline prices to stay high for long, so your pain at the pump should be temporary
“The pain you can measure in months rather than a likely long-term higher pricing trend,” he says.
Here’s Clark’s outlook on gas prices in the near term:
“We’re going to feel pain at the pump for a number of months. And then by sometime in the summer, historically July 4 is the point at which prices top and start coming back down.”
In the meantime, here are some things you can do to save money on gasoline:
How To Save at the Pump Right Now
Join a Gas Station Rewards Program
Have you ever thought about joining a gas station rewards program? You can benefit from discounts at the pump as well as perks like cash back and points toward the purchase of other products.
Use Gas-Saving Apps
I also use GetUpside and Waze to help me map the most efficient routes. That saves me gas because I drive fewer miles.
Want to learn more? Read Team Clark’s GetUpSide review.
Skip the Premium Gas
If your auto manual tells you to use premium fuel, that’s one thing, but if it’s not required, you may be wasting money.
To hear Clark’s full take on this topic, listen to the segment: