Gas prices have been volatile in recent years, making it challenging to budget for fuel costs. With prices fluctuating weekly or even daily in some areas, how can you estimate your weekly gas expenditure? Here are some tips to help you plan ahead.
Consider Your Driving Habits
The first step is to think about how much you typically drive in a week. Factors like your commute, errands, and weekend activities will all contribute to your gas usage. Make a list of your regular driving tasks and estimate the miles for each. Apps like Fuelio can track your mileage automatically if you’re unsure.
For example:
| Commute to work | 150 miles/week |
| Commute to school | 100 miles/week |
| Weekend errands | 50 miles/week |
| Extracurricular activities | 60 miles/week |
Total weekly mileage: 360 miles
Pay attention to times your habits change, like road trips or staying home sick, and adjust your budget accordingly.
Check Current Gas Prices
The fuel prices in your area will heavily influence your gas spend. Prices can vary a lot by region, city, and even neighborhood. Check GasBuddy.com to see the current average gas price where you typically fill up.
Let’s say you see prices near you averaging $3.50/gallon for regular gas.
Calculate Fuel Usage
Take your estimated weekly mileage and divide it by your vehicle’s fuel efficiency to determine how many gallons you use per week.
For example:
360 miles per week / 30 miles per gallon = 12 gallons per week
If you don’t know your fuel efficiency, check your owner’s manual or use an online calculator. Measuring your actual gas usage can also help determine this number.
Multiply by Current Prices
Now multiply your estimated weekly gas usage by the current price per gallon:
12 gallons per week x $3.50 per gallon = $42 per week
Based on this estimate, you would budget $42 per week for gas. Of course, this is just an approximation. Actual fuel spend will depend on variations in driving, prices, and your vehicle’s efficiency.
Build in a Buffer
To account for changing conditions, add a buffer of a few extra dollars to your budgeted amount.
For the example above, you might budget $45 per week for gas to be safe. This covers you when prices spike or your mileage increases some weeks.
Having the buffer in your budget helps absorb unpredictable changes without breaking the bank. Just be sure the buffer is reasonable and not excessive.
How Gas Prices Are Set
To better understand the frequent fluctuations, it helps to know how gas prices are determined in the first place. There are a few key factors that influence the retail costs we pay at the pump.
Crude Oil Prices
The price of crude oil itself makes up about 50-60% of what we pay for gas. This raw material is the biggest driver of fuel costs. Oil prices can move daily based on supply, demand, and geopolitical events. As crude prices rise and fall, gas prices follow.
Refining Costs
After drilling, oil has to be transported and refined into usable fuels like gasoline. This refining accounts for 10-15% of retail gas prices. Refining costs stay relatively stable but can increase seasonally as fuel formulations change. Regional differences in regulations also impact refining expenses.
Distribution & Marketing
Getting fuel from the refinery to the pump involves distribution and marketing. This process makes up about 15-20% of gas prices. Distribution via pipelines and tankers doesn’t change much. But marketing and operating costs for gas stations can vary and affect pricing.
Taxes
Federal and state governments also tax gasoline sales. Combined taxes add another 10-15% at the pump depending on location. Fuel taxes tend to stay consistent rather than changing with oil prices.
Factors That Influence Fuel Prices
Within the broad gasoline pricing system, a number of specific factors can cause fluctuations:
Supply & Demand
Basic economic forces are at work in the oil markets. When crude oil supplies fall or global demand rises, scarcity increases prices. Disruptions at oil fields or refineries can constrain supply. Growing energy needs in developing nations also drive up oil demand.
Seasonal Changes
Gasoline specifications change seasonally, requiring a switch between summer and winter fuel blends. Summer blends aimed at reducing smog are more expensive to produce. The switchovers between blends in spring and fall can temporarily increase pricing.
Geopolitical Events
Wars, trade restrictions, and other international conflicts involving major oil producers can limit supplies. Threats to production facilities abroad also cause uncertainty. Any geopolitical event that may constraint crude oil availability can lift fuel prices.
Weather Conditions
Severe storms, hurricanes and floods can temporarily disrupt operation of offshore drilling rigs and coastal refineries. Floods and storms that limit pipeline transportation also drive up costs. Even fears of potential weather impacts on gas infrastructure can boost prices.
Investor Speculation
Oil futures contracts allow speculation on price changes, which can amplify cost movements in either direction. When investors expect scarcity and price increases down the road, they bid up current oil prices. Their speculative trading adds to pricing volatility.
Strategies for Budgeting Gas
Accounting for ever-changing gas prices in your budget takes some smart strategizing. Here are some tips that can help:
Allow Room for Fluctuation
Build extra room into your fuel budget for price swings by overestimating your mileage or cost per gallon. This padding makes the numbers more resilient to change. You can adjust the cushion up and down as gas prices trend higher or lower over time.
Note Seasonal Shifts
Recognize that prices often increase heading into summer vacation driving season, while fall and winter may bring declines. Plan for alternating high and low price seasons in your yearly budget.
Track Gas Price Trends
Using apps like GasBuddy can help you monitor price changes and patterns in your area. Watching trends over the previous months can clue you in to where prices may be heading.
Shop Around
Prices can vary a lot between stations, especially between brands. Loyalty to a single station may cost you more. Occasionally check multiple stations in your area and fill up where gas is cheapest.
Change Driving Habits
Improving your fuel efficiency through slower acceleration, removing extra weight and avoiding excess idling can help offset higher prices. Consolidating trips and errands also reduces mileage and saves money at the pump.
Modify Vehicle Use
When gas prices spike, reconsider taking long discretionary drives. Carpool, use public transportation, ride a bike or walk more to cut fuel consumption further. If possible, save on gas by using a more efficient vehicle some weeks.
Gas Price Forecasts
Looking ahead, analysts project that 2022’s record-high gas prices will moderate but remain elevated. Here are some predictions for gas prices for the rest of 2022 and into 2023:
2022 Q3 & Q4
After peaking in mid-2022, nationwide gas prices have declined from over $5 per gallon on average to around $3.76 as of August. Experts see this downward trend continuing but holding above $3.50 through the end of 2022.
2023
For 2023, analysts expect average prices between $3.00 – $3.50 per gallon. Barring major disruptions, the resolution of seasonal pressures and recession concerns should stabilize pricing. Continued high oil prices prevent a return to 2020 gas price lows.
Long-Term
In the longer-term, gasoline prices are likely to resume seasonal fluctuations within this new higher range established in 2022. Aging refineries, growing global energy use and recurrent geopolitical issues will prevent significantly lower prices for the foreseeable future.
Conclusion
Budgeting for gas requires tracking your driving habits, monitoring price changes and planning for variability. While gas prices have retreated from 2022 highs, they are likely to remain elevated compared to the last decade. Being prepared for ups and downs will help you budget accurately through price swings. With some savvy planning, you can stay on the road while keeping fuel costs under control.
