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Current Gas Price Hikes Don't Measure up to Recent History, Says Edmunds.com


Edmonds

Knowledge Base: Top Ten Fuel Economy Misconceptions

SANTA MONICA, CA--February 23, 2011: The biggest one-day gain for oil prices in more than two years yesterday may focus more of America's attention on rising fuel costs, but the price increases at the pump are not yet as dramatic as other jumps in the last few years, according to an economic analysis by Edmunds.com.

"So, even in an environment of high fuel prices, it could still make more sense to go after a new Camry instead of a new Prius."

Since September 2010, average monthly gas prices have risen 45 cents to $3.21 (February month-to-date), an increase of 16.4%. But during the past four years, there have been several periods where gas prices increased by even more substantial amounts. In 2008, gas prices rose 94 cents" or 33.4% - to $4.11 between February 2008 and June 2008. Gas prices also increased 63 cents from February to May 2006, 86 cents from February to May 2007, and 94 cents from December 2008 to June 2009.

"Between yesterday's surge in oil prices and the recent unrest in the Middle East and North Africa, the media might stir itself into a frenzy, but past experience suggests consumer buying behavior won't change quite yet,"said Lacey Plache, chief economist at Edmunds.com. "When gas prices rise substantially and suddenly like they did in 2008, consumers are more likely to run out and replace their gas-guzzling cars. But more gradual increases in gas prices like what we're seeing now do not tend to have as strong an effect on overall auto sales."

Instead of driving consumers to the sales showroom, said Plache, the current pace of gas price increases is more likely to curb gasoline consumption habits through changes to driving behavior. In anticipation of growing costs at the pump, Edmunds.com offers several useful suggestions for drivers to save money with "Survival Strategies for Steeper Gas Prices." Some of the tips include:

  • Track the mileage you get in the cars you drive now. This can help you measure the impact made by any changes to your driving habits.
  • Assess what rising gas prices mean to your family. The impact may not be as dire as you think.
  • Switch to calm driving methods. Compared to a fast, lane-changing, sharp-braking style, Edmunds.com found that calm driving improved fuel economy by as much as 35 percent.
  • Stay away from gas-saving products. Such products rarely, if ever, work.

Fuel Efficient is not Necessarily Cost Efficient

For consumers already in the market for a new car, higher gas prices do not necessarily mean they need to make a dramatic change in the cars they prefer to drive in order to save money. In particular, Edmunds.com cautions that buying a new, and possibly more expensive hybrid may not be more cost effective.

"With incentives at their current levels, it is possible that any pinch felt by increases in gas prices could be counter-balanced by lower payments or by improved fuel economy in any new car," said Plache. "So, even in an environment of high fuel prices, it could still make more sense to go after a new Camry instead of a new Prius."