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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:

71Comments
Jun 11, 2012 7:36PM
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It's all our fault the gas prices are so high. When are we going to the source the gas companies. If  they did not own our leg. branches maybe something could be done.
Jun 7, 2012 10:09PM
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"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."  No they're not.  The price is down from $100+ to nearly $80/barrel.  That's over 20%.  20% x 76% = 15%, so the price should drop at least 15%.
Jun 7, 2012 8:14PM
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tebbah2 is a moron and econ classes would not help him. Remember the 2008 dem primaries when Clinton and Obama promised to lower gas prices. How? By higher taxes on oil cos. Duh!!! High prices are the only way the progressives forced green agenda will work.
Jun 7, 2012 7:50PM
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Can someone explain why................ If Oil back in 2007-8 was $125.00 per barrel and gas prices were the same pricing in today’s market at $3.70 or so, when oil is less than $84.00 per barrel , why would speculation of the world market in gasoline be so high. Who in the end becomes the major beneficiary of the unbalanced scenario? Can regulation become part of the solution or make it worse? Should I invest in Exxon ?  

Jun 7, 2012 7:06PM
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Adjusted for inflation since 1973, gas is a bargain.  I buy it at $3.09 and have seen it at $2.99.  If you live in an afluent area and are still paying high prices, just remember that your are "spreading the wealth" and you are making BO very, very happy.

Jun 7, 2012 5:59PM
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IT IS GREED  THAT IS G R E E D FOR THOSE THAT DO NOT COMPREHEND. PITTSBURG PA HAS 3 REFINERIES THAT SIT IDLE WHILE WE SEND ALL OIL TO TEXAS TO BE REFINED... HMMMM..... DISTANCE EQUALS DOLLARS TO BIG OIL AND BIG OIL IS CONTROLLED BY THE REPUBLICANS. KEEP THE PRICES HIGH REPUBLICANS GET MONEY IN THERE POCKET. DEREGULATE BIG OIL WHICH BOEHNER AND PALS HAS DONE AND THE PRICES ARE NO LONGER CONTROLLED WHICH MEANS EVEN BIGGER DIVIDENDS IN THE REPUBLICANS POCKET. AS LONG AS REPUBLICANS CONTROL THE PRICES AND PRESIDENT OBAMA OR ANY DEMOCRAT IS IN OFFICE AND THE PRICE WILL REMAIN HIGH AND KEEP RISING. IF THEY WIN THE PRICE WILL FALL DRASTICALLY TO PLEASANT PRICES  BUT WE WILL END UP IN A MOSLEM CONTROLLED GOVERNMENT. IF ANYONE HERE IS OLD ENOUG TO REMEMBER THE COST OF A BARRELL OF OIL IN THE 60'S AND 70'S WE ARE AT THE SAME PRICE AS THEN BUT THE PRICE AT THE PUMP WAS AROUND $0.28 TO $0.50 A GALLON. EVEN WHEN THEY CRIED AND SAID THERE WAS A SHORTAGE (HA HA HA) THE PRICE WAS LOW  HOWEVER THE REPUBLICANS AND BIG OIL  BEGAN THE CONTROL.   NOW THE ANNOUNCER HERE WANTS YA ALL TO BELIEVE THAT IT IS CHINA THAT IS USING ALL THE OIL. WITH A QUAD BILLION PEOPLE IN CHINA HOW MANY ARE WORKING THAT CAN PURCHASE A CAR ... OR A BIKE ... ASK ANYONE WHO HAS BEEN THERE THE PRICES ARE NOT CONTROLLED BY FOREIGN INVESTORS EITHER. IN GREAT BRITAIN IN THE 70'S THEY WERE PAYING AROUND $5.00 A GALLON OTHER PLACES AS WELL WERE UP THERE WHILE WE WERE PAYING BELOW A DOLLAR. WHY IS IT IN NICARAGUA  THE PRICE OF GAS IS $0.13 A GALLON ????   GREED
Jun 7, 2012 5:21PM
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Nice try.  When the government moved on the BP oil spill and hired bunches of non working people , then demanded that BP pay the costs of what the government thought they should do, they jacked the price of gas.  Note that it wan not just BP but all oil companies felt that if the government was going to levy these costs they had best collect them from the consumer before they had to pay them,  Now in California 13 refineries are shut down to satisfy their environmental requirements and that is forcing a further increase in all west coast states.  It would be easier to just cut off the supply of gas to one state but that is not how the system works.  Now you can cook the books anyway you want to but California and Obama are the two biggest drivers in the increase in gas prices.
Jun 7, 2012 4:09PM
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Oil and gas are no longer traded as supply and demand. If that was correct gas prices would be around 1.85 per gallon. Because of speculation it has driven up the price of oil and gas. It won't stop until hedge funds and other none oil or gas using entities keep speculating and driving the price up on oil and gas there are never going to take delivery of. Stop the speculators. The US will this year be a net exporter of oil. We will export more oil than we import why? Because we don't have the refinery space to refine it. there hasn't been a refinery built in the US for over 20 years. We have the oil reserves to produce all the oil we need for the US but because of government regulations we can't drill it. We could be free of this oil game and not dependent on foreign oil at all.
Jun 7, 2012 4:08PM
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Forget Iran.  The Saudis are trying to put their guy into the White House.  Which one?  Easy, if prices go up (or fail to drop) in October it's the challenger, if prices go down it's the incumbent.

 

They don't really care about party affiliation either.

Jun 7, 2012 2:58PM
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Ahh ****es? Couldn't  be UN regulated crony capitalism and oil wall street criminal speculators could it???

 

 

Imbilciles...

Jun 7, 2012 2:49PM
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The EPA, under Obama, has put such strict regulations on refineries, rather than comply (which is cost prohibitive) they are closing down.
Jun 7, 2012 2:39PM
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Because they are CRIMINALS full of BS excuses..


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 2:04PM
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all fuel produced in the US should have a tariff on it, since there is a world market we should make it too expensive to export any petroleum and keep that supply in our country, as it  is now gasoline sold on the world market is  subject to world prices, why not keep it here in the country ??
Jun 7, 2012 1:57PM
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I decided to support american jobs and support american energy. I was tired of my money being shipped out to help hold up corrupt puppets of the USA. I bought my chevy volt and get well over 200 mpg. Iv driven 5600 or so miles on 24 gallons of gas.

 

As a conservative I am tired of shipping everything out to sea when we have plenty of resources here.

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 1:47PM
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The people in the gas and oil business should all hang their heads in shame, but they don't because they just don't care as long as they can keep stuffing their pockets with ill gotten gains. These people have no shame or conscience and should go to jump in the lake, they are no good.
Jun 7, 2012 1:40PM
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Gee maybe after the November election gas prices will drop unless of course the speculators get a break from the GOP!
Jun 7, 2012 1:39PM
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Blah, Blah, F-ing Blah!   What a crock!!!!
Jun 7, 2012 1:38PM
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What a joke. When Bush was in office that's all you heard about was the gas prices and how it's his fault there so high. Now Obama's in office, gas prices are higher than ever before, and global issues are the cause for these insane amounts of money for a gallon of gas. This is biggest load of crap. If we had a president who was actually interested in helping the country he would have us drilling for our own oil, instead giving in to all theses insane environmental groups for there votes and money and doing nothing about it. If you want cheaper gas then vote Obamas worthless **** out of office!

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Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Our expert on stretching dollars is writer-editor Karen Datko, a veteran journalist who lives in small-town Montana. Datko paid off a 30-year mortgage in 11 years, pays her credit card balances in full each month and lives debt-free.

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