How to Beat High Gas Prices

Are high gas prices giving you road rage? Well, wait "til you see what's coming.

Prices at the pump currently average $3.89 for a gallon of regular unleaded, up 30 cents in the last month.

But it's already over $4.00 per gallon in many cities - more than double the $1.85 a gallon that prevailed when President Barack Obama took office.

And most analysts are predicting gas prices will go much higher.

The national average gas price should reach $4.25 by the end of April as refiners shift over to more expensive summer blends, Tom Kloza of the Oil Price Information Service told the Wall Street Journal.

As prices shoot through the previous high-water mark of $4.11 in 2008, filling your tank could soon hit you for $75-$90.

And the sky's the limit if Iran decides to block the Strait of Hormuz in retaliation for economic sanctions that go into effect in June.

The Cost of Zero Miles Per Gallon

Meanwhile, as prices climb, traffic snarls are chewing up plenty of time and money

Millions of Americans are effectively getting zero miles per gallon as they sit idle in traffic jams, testing their patience and burning their hard-earned dollars.

A new study by the U.S. Treasury Department finds that traffic congestion wastes 1.9 billion gallons of gas per year - roughly 5% of the total we use. At current prices, that's more than $7 billion being flushed down the drain by American motorists nationwide.

The government study - which supports a White House proposal to upgrade the nation's transportation infrastructure - determined the average American wastes more than 30 hours annually sitting in traffic.

It gets worse in major cities like Los Angeles, Washington, and Chicago, where drivers lose about 70 hours a year.

Other recent studies have indicated that we collectively waste an incredible 5 billion hours in traffic, which works out to billions of dollars more in lost productivity, according to MSNBC.

Overall, the study found traffic congestion costs us a whopping $100 billion in wasted fuel and lost time every year.

How to Beat Prices at the Pump

The jump in gas prices has many Americans scratching their heads.

Aside from buying a new car that's been tricked out to deliver higher fuel economy, there's really not much you can do about the cost of gas.

Energy Information Administration data shows that 76% of what we pay for gasoline is determined by world crude oil prices, 12% is federal and state taxes, 6% is refining and 6% is marketing and distribution.

Fact is, you can't control any of that. So just focus on what you can control.

Here's how to knock a dollar or two off your per-gallon price:

  • Grocery discounts -- Many big supermarket chains reward your purchases with discounts at the pump. Publix Supermarkets Inc. (PINK: PUSH) recently offered a $10 gas coupon for every $25 of groceries purchased. That could save you as much as $1.50 a gallon.
  • Gas company loyalty cards -- If you usually buy gas from a major national chain, apply for a loyalty card like the BP Visa Card. You get a 5% rebate on all gas purchased at BP plc (ADR NYSE: BP) stations. Shell, Exxon Mobil (NYSE: XOM) and others offer similar deals. Savings - 7 to 10 cents a gallon.
  • Rewards cards -- If you don't want to limit your purchases to one brand, sign up for a credit card that offer rewards for filling up at any station. Chase Freedom offers $200 cash back after you make $500 in purchases in your first three months, 5% cash back on gas during certain periods and 1% cash back on all other purchases.
  • Pay cash -- If you don't want to apply for a new credit card, try paying with boring old cash. Many service stations will reward you with a 10-cent-per-gallon discount.
  • Shop Around - Make sure you're getting the cheapest gas in your area. A recent check of GasBuddy.com for the New York City area showed $3.89 for the best price and $4.69 for the worst -- a difference of 80 cents a gallon.

Tips for Investors

Meanwhile, investors have several ways to protect themselves and even profit from the rising price of gas.

One strategy is to invest in the United States Gasoline Fund LP (NYSE: UGA), an exchange traded fund (ETF) that aims to track the movements of gasoline prices. The fund is up roughly 19% in the last three months.

More advanced strategies include buying an oil futures contract on the New York Mercantile Exchange or shorting transportation stocks like airlines, which tend to fall when fuel prices rise.

Noted energy expert Dr. Kent Moors recently issued a critical report detailing how Americans can avoid being blindsided by supply-driven oil shortages and skyrocketing prices...

Dr. Moors runs an investment advisory service, Energy Advantage that offers structured exposure to companies now benefiting from the rising price of oil...and gas.

You can read a free copy of his report here.

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