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.

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%.

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.

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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.

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