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Gas Going to $5 in 2012? Here’s How to Fight Back.

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Last week, I noticed many media outlets predicting $5 gas in 2012. It seems to have started from this post from GasBuddy. The theory goes that we have some of the highest gas prices we've ever had, and during the summer months prices typically get higher. This GasBuddy chart has the nation's average price at around $3.34 as of today. GasBuddy also says that prices typically peak at 93 cents from the start of the year. that would bring the average around the country to roughly $4.27, most likely in time for your Memorial Day vacation.

Where does the $5 come from? It seems that all the uneasiness and politics in the Middle East, particularly Iran, could lead to a slowed production of oil. That could raise prices. GasBuddy is even suggesting that oil prices could pass their high of $147 in 2008. While it seems that GasBuddy is the catalyst, CBS New York, CBS Baltimore, and ABC seem to be jumping on board with the possibility. Of course gas prices vary throughout the country, so if some places see $5 gas, others may avoid it.

So what can you about this? You can try to occupy your local gas station, but don't expect that to get gas prices lowered.

I see two things that you can do. The first is to look into these tips on saving money on gas. That's a no-brainer.

The second tactic is less obvious. If GasBuddy is right and the price of oil goes from around $100 today to the $150 record highs, you can make a lot of money by investing wisely. I have some money put aside in PowerShares DB Oil Fund (DBO). At that peak of oil price of $147 in July of 2008, the stock reached nearly $55 a share. It currently trades at around $30. If we see a similar trend, perhaps that stock jumps to between $50 and $60 a share. If so, you could nearly double your money.

As long as you invest enough, doubling your money would certainly ease the anxiety at the gas pump, right?

Who is up for a game of guess the peak gas price average (as reported by GasBuddy) this year? I'm going to go with $4.16. Leave your guess in the comments.

Posted on January 12, 2012.

This post deals with: ... and focuses on:

Economy

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12 Responses to “Gas Going to $5 in 2012? Here’s How to Fight Back.”

  1. Sun says:

    I call $4.34. Do I get a gas card if I win?

    The nice thing about $5 a gallon is that it strongly affects people’s behavior. Your driving has a purpose, you drive less, and you start buying more fuel efficient vehicles. I have no sympathy for those that own Ford F250 as a personal vehicle then whine about how much they have to pay for their gas or how they need it to pull their boat for a weekend out on the lake.

    Personally, I’m good with a tax to get gas up to $5, and all of it being used for sustainable energy research. Peak Oil is over. Its just a matter of time before our dependence on oil will end.

  2. David says:

    I invested some in iPath S&P GSCI Crude Oil Total Return (OIL) in 2008-09. Not as much as I spent on gas that year, but it eased the burden.

  3. David says:

    Sun, the problem with it affecting people’s behavior is when you get these self-proclaimed “hyper-milers” who don’t realize that accelerating like they’re driving a Yugo is killing gas mileage for them and everyone stuck behind them when they can’t keep up with 40 MPH traffic.

  4. Sun says:

    @David – I am not sure what you mean exactly… You’re saying people that aggressively stop and go affect the MPH of those behind them?

    I know with Toyota Prius and regenerative brakes, they get better MPG in traffic since they recover energy through the braking.

    For one month, I tried not accelerating past 3k RPM. It did extend my mileage, but I did notice others that got annoyed accelerate past me only to meet them at the red light or traffic jam a few seconds later.

    • Lazy Man says:

      Sun, I notice that when I drive fairly often. If people want to speed up and waste gas just to sit in a red light longer, I consider that their problem.

      They should be able to see the light ahead just like me and cruise to it in the same way.

  5. “Sun, I notice that when I drive fairly often. If people want to speed up and waste gas just to sit in a red light longer, I consider that their problem.”

    To be the devil’s advocate here … do you also notice the people who pass you and AREN’T sitting at the next stop light? If you’re at a stop light and see the familiar car, you’ll get a little *ping* of recognition (“Hey, I just saw that red car!”), but if you’re at the stop light and don’t see that car, there’s no corresponding trigger (“Hey, I don’t see that red car!”) simply because there isn’t any visual feedback to trigger the thought.

    I do agree that some people seem to spend a lot of effort weaving in an out of traffic for not a lot of gain.

    We got a “new” car last year (only had 66K miles when we bought it). My wife didn’t like it because it only has a 4 cylinder engine and she wanted a 6. Bear in mind that this is a commuter car that would be used exclusively on well-maintained roads (most interstate) and that there isn’t a particular need for the extra power.

    I eventually got her to forgive the little Hyundai with the logic that she’s likely to drive it less than 50 miles per year (while I’ll likely put 17,000ish miles/yr on it).

  6. Contrarian says:

    I always find the ‘price at the pump’ topic and the comments that follow quite amusing. Solutions predictably turn to cutting back, downsizing, and shifting towards austerity. When the headlines postulate on gas going up, people reflexively flip out, take extraordinary minimalistic measures, and reordering their entire life to save a few bucks on a tank of gas. I think most of us would find (unless we are a long haul trucker) when the price of gas goes up a $1 +/- per gallon, the extra amount we end up paying at the pump is minuscule as a percentage of our overall budget. Lazy – how bout’ a post on titled, “Keeping perspective when gas prices go up”?

    – Contrarian

    • Lazy Man says:

      Contrarian,

      I was going down the road of making that point at the end of the article. One of the articles that I linked was a quote from GasBuddy saying that gas will be a few hundred more per consumer this year. I decided not to go there, because I felt I had already credited GasBuddy about a thousand times in the article. I had to draw the line somewhere.

      In some ways a few hundred hundred isn’t going to matter to a lot of people. Those who are really living with no savings can hopefully cut back in a couple places (perhaps a couple of dinners out) and be fine.

      On the other hand, I was talking with my wife before gas jumped in 2008 and I happened to say something like, “If gas gets above $4 you are going to see the world explode.” I was exaggerating for effect, but she reminded me the other day that when gas prices did get above $4 the world, in her opinion, exploded. Of course that was in a figurative sense. One thing that I think many people don’t factor in is that when the price of gas goes up, the price of food follows as it costs more to get it to your table. That’s a double whammy for some. Then some people cut back and don’t go to restaurants (see my advice earlier about saving a few bucks) so restaurants suffer and have to cut back on staff. Jobs are lost there. Then there’s the travel expenses that are raised and people get bent out of shape that their vacation costs are more expensive. It impacts their relaxation time and that makes people more tense. You can see how this chain reaction leads to the world exploding…

      … or maybe not. (Do I have an over-active imagination?)

  7. Sun says:

    Don’t forget shipping cost for UPS/FedEx. For far too long though, we have lived a subsidized life of cheap goods and low gas prices. Imagine how our cities would be designed if proximity was placed at a premium. The city of Los Angeles would have never been built without inexpensive transportation.

  8. Contrarian says:

    Lazy – no doubt, but you’ll notice I specifically focused my comments on the price of gas at the pump, and made no reference to price of a barrel of crude.

    You are right, when the price of a barrel of oil goes up it has a meaningful impact on the price of many of things we spend money on. Almost everything we consume has to be shipped to us (which takes fuel) and many of the products we buy contain petroleum, so when a barrel of oil costs more, eventually so does the price we pay for most everything we buy.

    But let’s be clear, most of the hand-wringing and gnashing of teeth is over the few extra dollars folks have to pay at the pump, and little is said about the overall economic impact of rising oil prices. What I find amusing is absurd and nonsensical extremes people go to just to save a few dollars on a tank of gas.

    These are the same people who drive their overpriced brand new green/hybrid vehicle to Starbucks to get their $4 double late’ en route to Costco where they will waste 45 min in line in order to save 5 cents a gallon on gas.

    – Contrarian

  9. “One of the articles that I linked was a quote from GasBuddy saying that gas will be a few hundred more per consumer this year”

    That would be nice. I have to do so much driving that a $1 bump in price costs me about a grand. Good think we have vehicles that get good mileage …

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