What If Gas Cost $10 a Gallon?

If gas prices continue rising, paying $10 per gallon might become our reality. Life would go on, of course, but the increased expenses at the pump would certainly have a huge impact on the majority of Americans. Remember, those fuel prices are reflected in everything we purchase.

From MSN Money:

"It's hard for people to stop using fuel," says Fred Rozell, the director of retail pricing for the Oil Price Information Service, which tracks gas prices at more than 100,000 stations around the U.S. "They must still drive to work. They can only do so much telecommuting or carpooling. Most driving is still needed, and people make up for the increased cost in other areas of their lives."

There would be less money for other goods -- food, clothing, building materials, etc. -- and those items would be more expensive, because companies would pass on their higher transportation costs to consumers, says Troy Green, a national spokesman for AAA.

How much more expensive? Todd Hale, a senior vice president at research company Nielsen, says $10-a-gallon gas could boost the inflation rate to 10%. The result would be devastating to the world economy and to the global food situation, he says.

In the U.S., the restaurant business would be the first to see the reduction in spending as people cut back on how often they ate out, says Rozell. That probably would cause some restaurants to go under.

The grocery business would then see the effects, as shoppers switched from premium to store brands, used more coupons and waited for sales.

Continue reading at MSN.com...

Ex-Shell President sees $5 Gas in 2012

From CNN.com:

The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012.

In an interview with Platt's Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases.

"I'm predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices," he said.

Tom Kloza, chief oil analyst with Oil Price Information Service says Americans will see gasoline prices hit the $5 a gallon mark in the next decade, but not by 2012.

"That wolf is out there and it's going to be at the door...I agree with him that we'll see those numbers at some point this decade but not yet." Kloza said.

"The demand is still sluggish enough in some of the mature economies."

More at CNN.com

Four Tips to Save Gasoline This Summer

During the summer months many American families go on vacations. Because of the poor economy, more and more taxpayers are taking road trips, but the gasoline bills can quickly add up. WalletPop.com put together a helpful article with four ways to save gasoline. I have included a few tips below, but you can find the full list including a video here.

Turn off your air conditioner

Consumer Reports found that driving 65 MPH in a Honda Accord with the air conditioner running reduced mileage by 3%. But turning off your air conditioner and driving instead with the windows down is controversial, with some saying the drag on the car's aerodynamics cuts down on fuel efficiency and others saying no problem. The Consumer Reports team didn't find any measurable difference in fuel efficiency driving with the windows down, but others have. The jury is still out.

If you're hot, or your car is older, just roll down your windows already. Give your car a break and be kind to the environment.

This tip might not be realistic if you live in desert areas like Las Vegas or Phoenix. Still, you can help keep your car cool by parking in the shade, and using a windshield light reflector when parked.

Stop driving like a maniac and keep to the speed limit

Although it's tempting to speed, the urge will end up costing you. Besides breaking the law if you go over the speed limit, (and a couple of $200 speeding tickets will not help your wallet any this summer) driving aggressively will lower your gas mileage by 33% on the highway and by at least 5% on surface streets. An Edmunds.com independent test found this one tip resulted in more savings than any of them. The lesson? Try to drive zen. You'll get where you're going, we promise.

Continue reading at WalletPop.com…

U.S. Gasoline Tax Hike Unlikely, Key Senator Says

From Reuters:

The new Congress probably will not approve legislation to raise the federal tax on gasoline, the chairman of the Senate Energy Committee said on Monday.

Democratic Sen. Jeff Bingaman said he was aware of arguments that a "variable tax" should be put on U.S. gasoline to prevent falling pump prices from encouraging Americans to drive more while making alternative fuels less attractive.

Such a tax hike "would be very tough to pass," Bingaman said at the Center for Strategic and International Studies. "I don't think something like that has much prospect of being enacted in my honest opinion."

Americans pay an 18.4-cent federal tax on each gallon of gasoline they buy, plus an extra 29 cents on average in combined state and local taxes.

As the cost of gasoline has declined to half its record $4.11 a gallon set in July, some energy experts have said the United States should levy a tax. These experts point to Europe, where the gasoline tax is much higher, to reduce reliance on imported petroleum. The European tax formula keeps gasoline costs high even when crude oil prices fall.

The average cost of gasoline has dropped below $2 a gallon in 17 U.S. states, raising concerns among some that many Americans will return to driving gas-guzzling sport utility vehicles, hindering efforts to reduce reliance on oil imports.

10 Easy Ways to Increase your Gas Mileage

Although gas prices dropped a little over the past week, they are still high. Luckily, there are dozens of easy ways you can save gas and money by increasing your gas mileage. With just a few adjustments and a little patience you can save yourself hundreds of dollars every year in fuel. In today’s economy, who could not use a little more money?

1. Cruise When Possible
Cruise control works effectively in two ways. First, it keeps the car running smoothly and efficiently without jumps or sudden acceleration. Second, it has been proven to put people in a calmer state of mind, which reduces erratic, gas guzzling, driving habits.

2. Keep It Light
Having heavy objects, or just a lot of junk in your car can put a big toll on your mileage. By simply cleaning out your car, you will not only save fuel, but you will have a nice clean car!

3. Oil Changes
Checking and changing the oil in your car on a regular basis saves you more gas than you would imagine. Having clean oil in your engine helps the whole vehicle run smoother, making your vehicle more fuel-efficient.

4. Plan Ahead
Try planning errands in the same part of town around each other, so that you do not have to make multiple trips. By arranging your errands and appointments around each other will save you hundreds in gasoline every year.

5. Slow Down
The EPA estimates you pay about 20 cents more per gallon for every 5 miles you go over 60 mph. Although going 80 down the highway may get you some where quick, you will be paying much more per mile for the speedy trip.

6. Check Your Wheels
Poorly inflated tires waste a lot of gas. Studies show that keeping your tires at maximum pressure at all times can save you as much as 10 cents per gallon. It is a good idea to gauge your tires for pressure at least once a month.

7. Let Your Car Breathe
The air filter in your car is what lets it breathe, and a clogged filter will add drag to your car and waste gas. Check and maintain your air filter as you would your oil, to prevent this from happening.

8. Close Windows
Even if the weather is nice, having even one window down in your car while driving at highway or freeway seeds causes major drag. Believe it or not, studies show that using your A/C at speeds over 55 mph is actually more fuel-efficient than having your window down.

9. Take Advantage of Cool Weather
Gasoline is denser in cool temperatures, and since it is measured by volume and not density, buying fuel during cooler times of the day will let you get a little more gasoline for your money.

10. No Top-Offs
"Topping off", or overfilling your gas tank almost always wastes money and fuel. To avoid gasoline from splashing and getting wasted, stop adding more fuel after the pump stops the first time.

Top 10 Factors that Influence Fuel Prices

It does not take an expert to notice that gas prices have risen sharply over the past year. Although the average person probably understands that demand influences gasoline prices, you might be surprised to learn that there are actually dozens of different factors that can increase or decrease the price you pay at the pump. To help the readers of my blog understand how complex the prices of petroleum really are, I have gathered the following list of the top 10 factors that influence fuel prices.

1. High Demand

Demand is high for gasoline in not only the United States, but around the whole world. With more and more cars on the road every year, and a second baby boomer generation, the demand for gasoline is higher in this country than ever. Although increased gas prices have cause the average American to drive less in general, the population and number new drivers continues to increase.

2. Limited Resources

Pricing of petroleum is controlled by the OPEC countries, which own about 2/3 of the worlds oil reserves. Some feel OPEC countries control and change the price of oil at their will, but it is becoming obvious that the reserves themselves are beginning to run low. The supply of crude oil as a whole is dwindling. “Our demand has skyrocketed, but our ability to supply that demand has stagnated,” notes Stephen Schork of the industry newsletter, the Schork Report.

3. Weather

Disasters like hurricane Katrina and now the Iowa floods are contributing to the gas spike too. The flood contributed to the loss of over a billion bushels of corn, which causes significant harm to the ethanol industry.

4. Summertime Travel

In the summer, there are more RVs on the road, more vacations, and more overall gas usage. Due to the increase, gas prices go up every summer to deal with the higher demand. However, prices fluctuate frequently during summer months due to this occurrence.

5. Future Planning

Recent studies and investigations have found that gas prices are being raised not necessarily by immediate need, but by predictions of future consumption. Many consumers who find this fact are upset by the fact that they are being overcharged for future reserves.

6. Corn Crop Loss

Due to afore mentioned weather problems, ethanol made from corn crops is in short supply. With the shortage in ethanol, ethanol prices have shot up and fewer people are using it to power their vehicles. Therefore there is even more demand for fossil duels which causes prices increases.

7. Tax Rates

In addition to already high fuel costs, both the federal government and most states levy some sort of excise tax on consumers who purchase gasoline. The federal fuel tax hovers a little under 20 cents a gallon, while most state taxes are slightly about 20 cents.

8. Geographic Location

Where your buying gas makes a huge difference. Getting gasoline a few miles outside of a major city like San Francisco or Seattle can drastically reduce the price you pay per gallon. Additionally, some smaller cities across the country have higher gas prices to meet with their local economy and gasoline demand.

9. Competition

It is hard not to notice the competition when you see a gas station on each corner of almost every major intersection. When a larger city with more drivers calls for more gas stations, competition can raise and lower your local prices on a daily basis. With the allover raise in fuel prices, many consumers try to choose the station with the lowest price, forcing close competitors to watch and mimic each other constantly.

10. Other Petroleum Products

Although the demand for crayons cannot to be compared to the demand for gasoline, there are examples of another petroleum product that can take up resources as well. Bubble gum, record, tires, asphalt, propane, ammonia, and deodorant are all common products that require petroleum for production.

Top 8 Effects Gas Prices have on Taxpayers

Everyone who has a car is already feeling the effects soaring gas prices are having on the economy. But with all this talk about gas, and the economy, I wanted to take a deeper look at how the gasoline prices are affecting the average American taxpayers. So please enjoy my list of the top 8 effects gas prices have on taxpayers.

1. Higher IRS mileage rate
To compensate for the increase in the cost of running a vehicle, the IRS recently approved a 20% increase in their mileage reimbursement allowance. Effective September 1, 2008 the mileage rate will increase from 40.5 cents to 48.5 cents a mile.

2. Higher taxes on everything
Because of increased costs of production and shipping, you are basically paying slightly higher prices on almost everything you purchase. Especially when you buy any items that have a % based sales tax levied on them.

3. Fuel Surcharges
In addition to increasing consumer prices, some businesses are passing on a fuel charge to purchasers. This charge varies depending on the type of product or service you are purchasing, but can quickly increase the amount of money you spend on necessary living expenses.

4. More difficult business travel
Even with the IRS mileage rate increase, business related travel is going to become a lot more difficult as gas prices increase. Air plans are tightening their flights, and car rental agencies are increasing prices as well. As travel becomes more expensive, it will become harder and more expensive for any one who needs to travel for business.

5. Less likely to vacation
According the Danita Blackwood of Small Business Television, “the number of Americans making plans to take a vacation over the next six months has fallen to a 30-year low." As more and more taxpayers delay their travel plans, areas that depend on revenue from tourism will also feel the pain of high gas prices.

6. Lower suburban house prices
Ten years ago it seemed like almost everyone was moving from larger cities to suburbia. However, people are beginning to move back to the cities as the cost of commuting has gotten far too expensive. As people continue to try to unload their suburban homes, the prices will continue to drop and it will get even harder for sellers.

7. Stress at work
With nearly all businesses feeling the pressure of the economy, studies show that employees are getting worried about their job stability. This is making life more stressful for taxpayers both at home and at the office.

8. Harder to save or pay off debts
When Americans taxpayers have extra money they generally use it to pay off debts or save up for a rainy day. However, as we continue to spend more at the pump many taxpayers are not reducing the amount they spend. Instead, they are building up more debt that will only get harder to pay off as our economy continues its march towards a reces

NTEU Calls for IRS Mileage Rate Increase

With taxes prices increasing a record rates, the National Treasure Employees Union has called on the IRS to issue a mid year adjustment to the IRS’ 2008 standard mileage rate. I have included the full text of the release below, but if you would like to download it in Word format head over to NTEU.org.

NTEU Leader Seeks Mid-Year Adjustment From IRS in Mileage Reimbursement Rate

Washington, D.C.—In the wake of record—and still rising—gas prices, the head of the nation’s largest independent union of federal employees has called on the Internal Revenue Service (IRS) commissioner to make a substantive mid-year adjustment in the reimbursement rate for personal use of a vehicle for business reasons.

In a letter to IRS Commissioner Douglas Shulman—who has the policy authority to make such a mid-year adjustment, which would impact everyone in the country—President Colleen M. Kelley of the National Treasury Employees Union (NTEU) noted that record levels of gas prices are “placing an especially heavy burden on those who must travel to perform their work duties.”

These include a great many NTEU members employed by the IRS, as well as those at a number of financial regulatory bodies and other federal agencies. The NTEU leader made the request in the interest of all federal employees and others who use their personal vehicle for business travel.

The federal government’s reimbursement rate is set by the General Services Administration (GSA), but cannot exceed the amount set by the IRS as the maximum rate allowed as a business deduction. That rate currently is 50 ½ cents per mile.

“Given the extraordinary rise in gasoline prices,” currently averaging more than $4 a gallon across the nation, President Kelley wrote, “I would request that the IRS make a mid-year adjustment to the mileage reimbursement rate to accurately reflect the actual cost traveling employees pay.”

Pending legislation in the Senate would raise the rate to 70 cents per mile, she noted, but said that action by the IRS “would provide much more timely relief than depending on the slow pace of the legislative process.”

While unusual, this would not be the first time the IRS has made such a mid-year change in the rate; in 2005, then-IRS commissioner Mark Everson used his authority to honor a request from NTEU that the maximum rate be increased. Then, as now, gas prices were rising rapidly and with little prospect they would moderate.

“The needed relief his action provided to private and federal sector employees,” Kelley wrote of the Everson decision, “helped save many employees from having to pay work-related traveling expenses out of their own pockets.”

As the largest independent federal union, NTEU represents 150,000 employees in 31 agencies and departments.