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Why gas prices remain high

Gas prices have remained stubbornly high despite more supply and less demand. Here are 14 tips to reduce your cost.

By MSN Money Partner Jun 6, 2012 2:56PM

This post comes from Angela Colley at partner site Money Talks News. 

Money Talks News on MSN Money

According to AAA, a gallon of regular gas costs less today ($3.565) than it did a week ago ($3.626), last month ($3.777), or even last year ($3.771).


Of course, that's a national average. In California, the average is $4.193, while in Bismarck, N.D., it's $3.598. Still, doesn't it seem that prices should be lower? After all, U.S. oil production is up, while "net oil imports have dropped a third since 2005," USA Today reports.


In the video below, Stacy Johnson explains why gas prices have remained stubbornly high. Check it out and then read on for 14 ways you can beat those high prices.

Earlier this year, Consumer Energy Report added up the cost of the various components of gas prices. Here's what it looks like:

  • Distribution and marketing -- 6%.
  • Refining -- 6%.
  • Taxes -- 12%.
  • Crude oil -- 76%.

Image: Filling fuel tank (© Corbis)So crude oil is most of the cost and, as Stacy explained in the video, oil is traded on a global market. So even though Americans are finding more oil and using less, developing countries like China and India are taking up the slack and keeping the pressure on prices. And tensions in oil-producing countries like Iran also cause prices to spike because investors fear an interruption in supplies.


While we can't control oil prices around the globe, we can stretch our gas dollars here at home. Here are a few obvious -- and not so obvious -- ways to conserve and save:


1. Take public transportation. Obviously, this works better in big cities. I live in New Orleans and save hundreds each year taking the bus. One bus ride costs $1.25 and takes me all the way across town. If I took my 16-miles-per-gallon clunker, I'd use two gallons of gas -- about $6.60 at current prices. That's a savings of $5.35 each way.


2. Buy gas at a warehouse club. When I do buy gas, I buy it at Sam's Club. You need a membership to fill up at one of the big bulk store's gas stations, but I save an average of 10 cents per gallon.


3. Ease off the gas pedal. Aggressive driving -- jumping on the gas when the light turns green and speeding to the next one -- can decrease your fuel efficiency by 37%, according to auto site Edmunds.com. Simply driving moderately can give your car near-hybrid performance. Not only is this the single best thing you can do to use less gas, it's free.


4. Don't speed. Consumer Reports tested a sedan and SUV and found that decreasing the speed from 75 to 55 mph improved gas mileage by 35%. Leave a little earlier, be less stressed and save.


5. Get a tune-up. After a tune-up -- and let's include an oil change, wheel alignment and air filter replacement -- your car will run more efficiently. The Federal Trade Commission says you can increase gas mileage by an average of 4%.

 

6. Find cheap gas with your smartphone. There are plenty of apps that help you locate the cheapest gas prices in your town. Here are my favorites:

7. Use the right gas for your car. My friend fills up with premium gas even though the automaker recommends mid-range for her car. She thinks it makes the car more fuel-efficient. It doesn't. The FTC is really blunt about that: "It won't make your car perform better, go faster, get better mileage or run cleaner. Your best bet: Listen to your owner's manual."


8. Drop extra weight. Don't carry about extra weight in your trunk or backseat. According to  Bankrate, your car loses one mile per gallon in fuel efficiency for every 250 extra pounds you carry.


9. Drive to the farthest errand first. Popular Mechanics says you can increase fuel efficiency by grouping your errands and driving to the farthest location first. By driving a longer distance at a consistent speed, you give your engine time to warm up, which uses gas more efficiently.


10. Don't idle. If you're stuck in idling mode for more than a minute, turn your car off. Excessive idling decreases your car's fuel efficiency by 19%, says Edmunds.


11. Coast. Slamming on your brakes in traffic is bad for your car and your gas mileage. If you can anticipate the lights and coast in gear until they turn green again, you'll boost your miles per gallon by up to 50%, Popular Mechanics says.


12. Use your cruise control. Cruise control is up to 14% more efficient than standard driving, Edmunds says. So use the cruise control on long, flat roads, but switch it off on hills because your car will guzzle gas trying to maintain a consistent speed.

13. Check ethanol rates. Most gasoline comes with some level of ethanol, but higher levels lower your miles per gallon. Popular Mechanics says to avoid gas rated E15, which contains about 30% less energy than pure gasoline. Look for a rating of E10 or lower.


14. Invest in oil companies. While these tips will help you save money and conserve gas, you can't really beat the big oil companies -- but you can join them. In 2009, Stacy bought 300 shares of ConocoPhillips at $37 per share. Back in February, Stacy said those shares were worth about $64 per share, or $8,000 more than he paid for them. So while Stacy struggles with high gas prices like the rest of us, at least he covers the extra expense -- and then some.


More on Money Talks News and MSN Money:

69Comments
Jun 7, 2012 8:58AM
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Crude was almost at $150 per barrel in the summer of 2008; a gallon of gasoline was around $4.25.

Crude is at $85 per barrel today; a gallon of gasoline is around $4.25.

SOMEBODY PLEASE EXPLAIN THIS TO ME

When crude drops, the prices at the pumps don't change for weeks and months!!!!

When crude spikes, the prices at the pumps skyrocket the VERY NEXT DAY!!!!

WE ARE GETTING RIPPED OFF

Paying by credit card adds 10 cents per gallon!!!

Paying by debit card now comes with fees from the banks!!!!

WHAT GIVES??????????

I live in New York, the most corrupt state in America!

Jun 6, 2012 4:06PM
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Then do tell why then the price of a barrel of oil is low on the global market yet prices stay artificially high. Didn't you say oil price is 76% of the costs?
Jun 6, 2012 4:07PM
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The reason why gasoline is over priced is because of corporate greed.
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If gas and fuel prices would drop to $2.50/gal to $2.00/gal, like the should be, we would see the economy improve to record proportions.

What is never discussed is the recession started when the fuel prices increased, in the end of 2006, to above $4.00/gal.

I had a small, independent trucking co. then. in Jan. 2006 fuel hit $3.00/gal.

By the end of 2006 I was paying close to $5.00/gal. I paid over $6.00/gal once in Nebraska.

I put in around 40,000 gals of fuel, per truck. So, figure it up, My profits, and my business, along with many, many independents, went into the fuel tank.

The $2.00/gal. difference equals $80,000 of profit I didnt make.

I went out of business in May 2007.

Jun 6, 2012 4:54PM
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Run over a oil company executive or a Wall Street speculator.
Jun 7, 2012 11:48AM
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Then why is gas only .12 a gal. in Venezuela and .52 per gal. in Lybia?  If it's a global market.
Jun 6, 2012 10:27PM
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What a crock. It's futures trading. The US exports more oil than we import.
Jun 7, 2012 11:50AM
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two words to say why gas prices are the way they are, PURE GREED!!!!@
Jun 7, 2012 1:49PM
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Why is gas only like 7 cents a gallon in venezuela if prices are determined by the so called global economy?
Jun 7, 2012 12:14PM
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IT all BOILS down to MAKING MONEY!

Who cares about us CONSUMERS !
Jun 7, 2012 12:08PM
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Foreign countries keep oil prices low for their own people.......The 1%ers in Washington are in cahoots with the Oil Companies.....who are raping America of her treasure........vote them all out.....
Jun 6, 2012 5:26PM
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He forgot to mention the bottleneck where oil turns into gasoline. There hasn't been a new refinery built in this country in almost 40 years. Why? Because regulation makes constructing new refineries unprofitable. The average american still hasn't caught on that the consumer is the one who always pays for regulation. 
Jun 7, 2012 12:16PM
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Apparently nobody in Washington has any moral values.......
Jun 6, 2012 4:33PM
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Well it seems the decrease in oil prices due to decreased demand and more importantly the recent strength in the dollar was anticipated by the refiners. Voila another refinery fire in California that just happened to coincide with other refineries shut down for maintainence. These unfortunate events always seem to happen when an impending price decrease is in the pipeline. It's also a funny thing that every gas station still has tens of thousands of gallons in their tanks to sell and nobody has been turned away.
Jun 7, 2012 2:14PM
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Gas prices are high because oil companies are greedy.  Several years ago, everyone was paying at least $4 per gallon.  Yes, we cut down on driving then, but we were still payng that price.  Since then, gas prices never went below $2.50 per gallon.   They, the oil companies, keep saying that China is consuming more oil products than before.  Sounds like a crutch they use to help keep gas prices high.
Jun 7, 2012 8:10AM
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the media is one of the main reasons gas prices are still way too high.the real reason is that the f-----ing criminals that call themselves oil co.execuitives want to continue to ring up record profits.these companies,led by exxon mobil,are raping the american public every day.don't count on anyone's help,solving the problem(government is more corrupt than the oil cos.)we need to fight back.....take action
Jun 7, 2012 1:02PM
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Oil has ruin our economy for the last 8 years they have kept prices up and have taken the money right out of the peoples pockets therefore people do not have the money to buy products.
Jun 7, 2012 4:11AM
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The price of oil and gasoline is determined by those who manipulate and control the crude oil futures markets, namely, the IntercontinentalExchange (ICE), ICE Futures Europe and the NYMEX, and the price of oil is not decided by Obama, OPEC, Iran, global oil prices, Saudi Aramco,Inc., the Euro Zone, refinery fires and the laws of supply and demand.
Jun 7, 2012 12:14PM
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It finally occurred to the politicians that they don't have to be fair to the middle class in America.....they don't have any money any more............
Jun 7, 2012 8:26AM
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The article neglected to mention that the oil oligarchies really control the price of oil.  You can see that in the changes in the gas prices when change as much as 15 cents in a day and change hourly.
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