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Gas Prices: How Low Will They Go?

Nearly two months ago, I told you that gas prices were headed down to around $3.50 a gallon. We are almost there already, with the AAA fuel gauge report showing a national average of $3.56 this week -- but now one of the same forecasters who got that call right is predicting another 25- to 30-cent drop over the rest of the summer.

"Prices will be lower until we reach hurricane season, then who knows?" predicts Tom Kloza, chief analyst for the Oil Price Information Service and one of those who saw $3.50 gas ahead when prices were close to $4 a gallon. Kloza points out that a serious hurricane, most probable in September, could disrupt Gulf of Mexico oil production, refinery operations in Louisiana or both. If either happens (or both), gas prices could turn upward again.

As always, behind those national average prices are much higher costs in some states. California remains at $3.78 a gallon and Illinois $3.81. And a further drop of even 30 cents would not change the attitudes of car buyers very much, according to the latest survey from Kelley Blue Book. Unless prices drop well below $3.25 a gallon -- something that is not in the current forecast -- car shoppers will not change the vehicles that they will consider, accord to the Kelley analysts.

However, the Kelley analysis also notes that the drop since April has capped the dramatic rise in used-car prices for high-mileage cars. With prices for such fuel-efficient cars this year up more than 20% through April -- nearly 40% for mileage champ Toyota Prius -- falling gas prices have finally caused such prices to peak. And the Kelley staff foresees that these used-car prices will fall further during the rest of the summer. "If possible, it would be best to hold off purchasing a fuel-efficient vehicle until after summer, when prices should be more stable," advises Alec Gutierrez, manager of vehicle valuation for Kelley.

As your wallet may tell you, the latest fall in gas prices does not mean driving is a bargain yet: Gas still costs 80 cents a gallon more than it did a year ago. So make sure you are saving on gas any way you can. Discounts on purchase points racked up at the Stop 'n' Shop supermarket are saving me 60 cents a gallon at Shell Stations. Other grocers and retailers have similar programs.

And if you have developed good gas-saving habits -- like consolidating trips for errands so as to use less gas -- during the recent price spike, don't change now. Paying attention to fuel economy can boost your mileage significantly. Here are some of the most effective techniques to increase fuel efficiency:

  • Slow down and calm down. By cutting speed from the mid-70s to 65 mph and avoiding lane changes and bursts of acceleration, test drivers at auto site got a 33% to 38% mileage improvement in various vehicles.
  • Don't tailgate. Not only is it dangerous to drive close to the car ahead of you. It also means you need to brake and re-accelerate when cars in front slow down. So even in stop-and-go rush hour traffic, leave yourself enough room to drive smoothly and save gas.
  • Don't put luggage on top of the car. Those roof-top luggage carriers are tempting for a family vacations, but put your stuff inside the car, SUV or minivan if you possibly can. Increased air resistance from rooftop luggage carriers added cut gas mileage 21% in the Edmunds tests.
  • Avoid idling. While shopping or doing errands in the city or suburbs, shut off the engine if you are stopping for more than a minute. When you sit with the motor running, you are basically getting zero miles per gallon.
  • Check your tire pressure. Like tailgating, under-inflated tires can be both dangerous and detrimental to gas mileage. Keep the tires at the pressure stipulated by the manufacturer -- it's usually posted on a plaque on the driver's door, visible when the door is open. Having tires inflated 25% less than the recommended pressure can cut gas mileage 3% to 5%.
Following these simple steps will help you save money even if gas prices head back up later in the year.

Gas pump photo courtesy of Flickr user matteson.norman
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