MONEY Gas

Gas Prices Hit a High for 2014—but the News Isn’t All Bad

Steven Puetzer—Getty Images

Right now, prices at the pump are as expensive as they've been all year. With any luck, though, it'll be all downhill from here.

According to the federal Energy Information Administration, as of Monday, the national average for a gallon of regular gasoline reached $3.70. That’s 13¢ higher than a year ago at this time, and it matches the previous high thus far in 2014, set in late April.

The bad news, beyond the obvious—you know, having to pay more to fill up and all—is that prices have been creeping upward just at a time the opposite was supposed to happen. The expectation was that gas prices would actually decrease in June, as they have in each of the past three years. The summer forecast from AAA called for a 10¢ to 15¢ per-gallon drop in prices at the pump this month, and predicted that the national average would remain in the vicinity of $3.55 to $3.70 through the summer. We’ve already hit the high end of the predicted price range long before anticipated—and gas prices have tended to rise toward summer’s end in recent years.

That said, prices at the pump aren’t exactly spiking. Nationally, the per-gallon price is only up a few pennies compared to a week ago, or even a month ago for that matter. Still, because everybody was expecting a significant decline this month, drivers are justified in feeling like they’re paying a lot more than they should to gas up right now. Turmoil in Iraq is being blamed for the persistently high gas prices.

So what’s the good news here? While drivers in 41 states and Washington, D.C., are currently paying more for gas than they did at this time last year, a handful of states are starting to see price breaks. According to the gas-pricing monitoring site GasBuddy, Indiana, Ohio, and Michigan drivers have all seen a per-gallon price decrease of 9¢ to 12¢ over the past week. And areas that have experienced a gas price hike lately can expect prices to flatten out going forward. “Many areas that saw gains over a nickel should see a calmer, cooler week at the pump,” a GasBuddy post on Monday explained. “So far this morning, oil prices are down 55 cents a barrel while gasoline spot prices are generally negative, a good sign for motorists.”

What’s more, the analysts generally say that it’s extremely unlikely the national average will reach $4 per gallon, or even close to $3.90 as happened in September 2012.

Then again, the analysts have been wrong before. Like when they were making predictions just a few weeks ago, for instance.

TIME

When Is it Best to Refill a Tank of Gas?

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DreamPictures—Getty Images/Blend Images RM

Answer by Ryan Carlyle, an engineer, on Quora.

I have a few important reasons outside your vehicle’s mechanical behavior to keep your tank half full or better.

Whenever there is a natural disaster, disease outbreak, major holiday, or other reason for a large number of people to leave the cities at once, everyone will want to fill up at the same time in the same place. Keeping your tank on the low side most of the time increases your risk of getting stuck in gas station lines, or running out of fuel when the highways jam up, or other screw-ups that can range in severity from inconvenient to calamitous. Do not be the sucker waiting in a 6 hour gasoline line when an evacuation is ordered. Do not be the poor schmuck who runs out of gas and is stranded when a natural disaster is about to hit. Always, always, always keep enough fuel in your tank to get out of town in a hurry. This is basic emergency-preparedness.

The other reason to keep your tank at least half-full is national energy security. One of the dark secrets of the world’s energy infrastructure is that it has very little centralized storage capacity — creation of government stockpiles like the US Strategic Petroleum Reserve has actually caused the private sector to decrease their storage capacity to just barely cover minor supply shocks and seasonal demand fluctuations. World fuel and oil supply is entirely based on constant pipeline flows and tanker traffic — if the flow is disrupted by war or disaster for even a few days, localized shortages appear almost immediately. It’s actually a very robust system, and the shortfall is always made up via redistribution of existing supply, but there is a considerable delay (1-2 weeks) before supply lines can be rerouted.

So how does this affect you, the individual driver? Gasoline production is very well-balanced with average demand, and enough fuel is always made to supply everyone. The real problem isn’t lack of fuel, it’s too many people trying to fill up at once. If the media whispers the word “shortage,” everyone rushes out to fill their tank at once. You can’t top off all the cars in the country in a day. All the gas stations and distribution depots in the country have considerably less total storage volume than everyone’s individual vehicle tanks added together. So there doesn’t have to be a real supply shortage! Just the threat of a shortage causes people to overwhelm the system, creating an artificial shortage for a week or so until the oil and fuel flows can catch up.

By keeping your tank over half full, you can ride out both real supply shortages (which clear out in a week or two) and panic-induced fake supply shortages (which also clear out in a week or two). Do not be part of the panic. Do not contribute to the world’s susceptibility to energy supply disruption. Do your part to improve your country’s national energy security by using your vehicle as rolling fuel storage. If everyone always kept their tanks over half full, it would double the world’s normal fuel storage levels.

This question originally appeared on Quora: When is it best to refill a tank of gas? More questions:

MONEY Gas

WATCH: Iraq Conflict Could Lead to Higher Gas Prices

The latest conflict in Iraq — the world's second-largest oil producer — could result in your paying more at the pump for gas.

MONEY Autos

The Little Engine That Could Save You Big Money

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BMW's sleek new i8 Sports Coupe hides a 3-cylinder engine under the hood. courtesy BMW GROUP

Automakers are being curiously quiet about the expanded use of an engine that’s lighter, more fuel efficient, and even safer than what drivers have come to expect under the hood. Why?

Because the type of engine in question runs on three cylinders, a breed that’s widely been considered “weird” and “wimpy.” The truth is that many of today’s 3-cylinder engines are neither.

The shift to smaller engines has been long in the making. By 2011, roughly half of new cars sold had 4-cylinder engines, up from around one-third in 2007. The average fuel efficiency for new cars has kept increasing, reaching over 25 mpg in recent months, and in order to hit the aggressive CAFE (corporate average fuel economy) goals established by the National Highway Traffic Safety Administration, vehicle mileage will have to keep inching upward.

One way automakers are trying to pump up fuel efficiency is by expanding the use of engines that have traditionally been associated with snowmobiles, mopeds, and lawn mowers. Manufacturers such as Ford, Nissan, and BMW have spent years developing vehicles with 3-cylinder engines, and now there are a handful of models with the teeny-tiny engines on the market. Among the options are the 2014 versions of the Ford Fiesta SE and the Mini Cooper, as well as the BMW i8, a sleek new hybrid sports car that’s expected to have a sticker price well over $100,000.

You probably haven’t heard much about the engines in these cars, however, which seems odd. Automakers love promoting every innovation and technological advancement. BMW, for instance, devotes ample website space to the i8’s design features that boost efficiency, including streamlined aerodynamics and the way “the passenger compartment is made of a carbon fibre composite, which proves to be an ingenious all-rounder: up to 50 % lighter than steel and approximately 30 % lighter than aluminum.” By contrast, very little attention is given to the fact that the gasoline engine under the hood is of the 3-cylinder variety. It’s buried low on one web page amid a barrage of jargon concerning the vehicle’s “BMW eDrive technology and a BMW TwinPower Turbo 1.5-litre, 3-cylinder petrol engine.”

As Automotive News recently explained, the 3-cylinder engine still has a “wimpy reputation,” generated by earlier, golf-cart-like 3-cylinder models. “Ford, BMW and other automakers are not drawing attention to the number of cylinders,” the Automotive News story noted. “That’s due in part to the reputation of three-cylinder engines. Instead, their message focuses on performance and fuel economy.”

The Mini Cooper and the Fiesta SE both get highway mpg ratings in the 40s, and they’re not underpowered, with 134 and 123 horsepower, respectively. The new Mini does 0-60 in 7.4 seconds, 2.3 seconds faster than its 4-cylinder-powered predecessor. (The new Mitsubishi Mirage and Smart fortwo, which also have 3-cylinder engines, have horsepower more in line with what most consumers would expect: 74 hp and 70 hp, respectively.) Three-cylinder engines are also lighter, which of course helps fuel efficiency, require fewer parts (which lowers manufacturing costs), and take up less space under the hood, which can improve safety because there’s less chance it will penetrate the interior in a front-end collision.

It’ll be up to cars like these, as well as high-tech 3-cylinder engines developed by Nissan, one of which weighs just 88 pounds and pumps an amazing 400 horsepower in the automaker’s batmobile-like ZEOD RC concept car, to convince consumers that a 3-cylinder engine is good for more than cutting the grass. Some auto insiders say that the assumptions most drivers make about these engines are outdated, and that the engine’s reputation is bound to change once word spread about the advances that have been made.

Jalopnik declared that 2014 will be the “year three-cylinder engines stop being weird,” and, presumably, wimpy. “It’s time for three cylinders,” Jalopnik’s Jason Torchinsky proclaimed. As for the skeptics and naysayers, who are stuck with the perception that 3-cylinders can’t adequately power anything bigger than a scooter? “Remind your wanna-be gearhead co-workers that most of these modern 3-cylinders have power pretty damn close to V8s in the mid-1970s.”

TIME energy

Russia and China Reach Major Gas Deal

Russian President Vladimir Putin
Mikhail Klimentyev—Presidential Press Service/AP

A major Russia-China gas deal comes at a propitious time for the embattled President Putin

Updated at 9:35 a.m. ET

Beijing and Moscow reached a long-awaited natural gas deal Wednesday that would supply hundreds of billions of dollars of Siberian gas to China, Chinese media reported, as Russian President Vladimir Putin seeks reorients his gas sales toward the East.

A $400-billion deal for a 30-year supply of natural gas has been negotiated for nearly a decade, with Russia hesitant to concede a lower price for China than its European customers, the New York Times reports. Russia would invest $55 billion in infrastructure for transporting the gas to China, Gazprom CEO Alexei B. Miller said.

The contract is for 38 billion cubic meters of gas each year, the Wall Street Journal reports, implying a price of about $350 per thousand cubic meter—at the low end of what Gazprom currently charges clients.

“Russia needs this China deal very badly because it needs to signal to [Brussels] and to some EU nations that it’s taking a step that’s economically profitable and that it’s found a new market for its gas,” said Shamil Yenikeyeff, a research fellow at the Oxford Institute for Energy Studies.

Putin has sought to sell gas in China and diversify out of stagnant European markets, particularly now in the face of sanctions and political tensions in the West. Experts said Putin’s meetings with German chancellor Angela Merkel and President Obama in June were a key motivator in completing a deal with the Chinese.

[NYT]

TIME Autos

The Incredibly Simple Way to Get Drivers to Buy Fuel Efficient Cars

Japan Nissan
Itsuo Inouye—AP

The secret lies in making it crystal clear how much they’ll save in gas costs over the long haul.

In every car dealership, a new vehicle for sale is required to have an EPA car label slapped on the window. The labels are loaded with numbers and ratings and have a dozen different features, including the estimated fuel economy (with city and highway breakdowns), the estimated annual fuel cost for operating the car, a fuel economy and greenhouse gas rating, a smog rating, and a smartphone QR code that can be scanned for additional information.

But a new study by Duke University researchers makes the case that one critical bit of information is missing from the labels. The labels today show how many gallons of gasoline a vehicle uses over the course of 100 miles of driving, and they also provide an estimate for annual fuel costs, based on a rate of $3.70 per gallon and 15,000 miles of driving per year. Researchers say it would be helpful—for consumers and the environment alike—to do some more math for potential buyers and show how much owners can expect to spend on gas for the long haul. Like, say, 100,000 miles.

In the study, participants were presented with a variety of different scenarios and asked to pick the vehicle they preferred. For instance, one group was asked to choose either: Car A, which costs $18,000 and $20 in gas over 100 miles of driving; or Car B, which costs $21,000 and $16 in gas over 100 miles of driving.

Another group was asked to choose either: Car A, which costs $18,000 and $20,000 in gas over 100,000 miles of driving; or Car B, which costs $21,000 and $16,000 in gas over miles of driving.

Both scenarios are essentially the same: The upfront costs and fuel economy in Car A and Car B are the same in both scenarios. But guess which scenario resulted in way more consumers choosing Car B, the more fuel-efficient and cost-effective option? Yep, the second hypothetical, which did the long-term math for consumers and demonstrated that an owner would save $1,000 over the course of 100,000 miles by choosing Car B over Car A.

In fact, in the many scenarios presented—including several instances when the vehicle with better mileage didn’t pay for itself in gas savings—would-be buyers were most likely to select the more fuel-efficient vehicle when the costs were shown over the course of 100,000 miles. That doesn’t mean that the average consumer would actually buy a fuel-efficient vehicle if it didn’t make financial sense.

“People are very sensitive if the vehicle paid for itself or not,” Adrian Camilleri, one of the study’s authors, said in a phone interview. “People don’t like cars that don’t pay for themselves. But they show the greatest interest in more fuel-efficient cars when they’re shown the gas costs over 100,000 miles.”

Overall, in the sum total of all scenarios—including, again, some in which the more fuel-efficient car didn’t pay off—among the participants who selected the more fuel-efficient car, 61.6% did so when shown the gas costs over 100,000 miles, versus 46.6% when gas costs were simply shown over 15,000 miles, like they are currently on new-car EPA stickers. Specifically, when given costs over 100,000 miles, participants chose the more fuel-efficient model 87% of the time when it paid for itself, versus 36% when the gas costs savings didn’t pay off. But when shown costs over 15,000 miles, participants chose the more fuel-efficient model 73% of the time when it paid for itself, versus only 20% when the fuel-efficient car didn’t pay off.

What may come as somewhat of a surprise is that showing consumers gas costs over 100,000 miles significantly increased the odds of someone choosing the car with better mileage even when the choice didn’t result in an overall cost savings. “What we found is that many people want to buy more fuel-efficient cars when they’re close to paying for themselves,” said Rick Larrick, a Duke management professor and one of the authors of the study, published in the spring issue of the Journal of Public Policy & Marketing. “That’s when their sense of environmentalism kicks in. They might not be willing to pay a large premium, but they realize how close the difference gets when they see gas costs over 100,000 miles.”

Larrick said that consumers may also do a little more math for themselves and see that if they drive the car well over that marker—the life of many cars nowadays extends well over 200,000 miles nowadays, after all—that the vehicle with better mileage will, in fact, make more sense financially.

As for the EPA stickers, Larrick thinks that instead of adding the estimated gas costs over 100,000 miles to the already clogged label, it would be best to substitute it in there for one or more of the other fuel cost data points. “They already have the annual fuel costs and the amount drivers would save over five years compared to the average vehicle, which is pretty redundant,” said Larrick. “There’s a way to simplify this. The cost over 100,000 miles is just a more important metric.”

TIME Autos

One of Life’s Annoying Regular Expenses Is Getting Cheaper

Prices are on the rise for everything from meat to limes, from rent to Netflix. But one of life’s commonplace expenses is surprisingly on the decline.

According to AAA, the average cost of owning and operating a sedan in the U.S. is now $8,876 per year, which is lower than it was in 2013 ($9,122) and 2012 ($8,946). The figures are all based on an owner driving 15,000 miles per year in an average sedan. Naturally, annual costs are much higher if you’re the owner of an SUV (average of $11,039 this year, versus $11,599 a year ago) or a minivan ($9,753 vs. $9,795).

Costs aren’t coming down because of decreases in purchase prices. The average price of a new car last summer hit a record high of $31,252, a figure that’s been topped lately with average prices over $32,000 in recent months.

(MORE: Could It Be? Gas Prices Have Probably Already Peaked for 2014)

Even so, the overall cost of ownership is down, and the largest factor bringing on the decrease is the fall in the price of fueling one’s vehicle. AAA estimates that the average price of regular gasoline is down nearly 6% this year compared to 2013. (In past years, it’s been fairly standard for gas prices to shift in only one direction: up.) Combine that with the fact that the average fuel economy for vehicles has been climbing (over 25 mpg lately), and the costs of gassing up one’s car are down over 10% this year. (In a somewhat ironic twist, the widespread improvement in fuel economy in today’s traditional internal combustion-run cars is one reason that consumers aren’t turning to even more efficient (but expensive) electric vehicles and plug-in hybrids in larger numbers.)

Costs related to tires, insurance, and depreciation are all also down slightly this year, though in most cases the effect on one’s overall costs is marginal: The average insurance premium, for instance, fell from $1,029 last year to $1,023 now. So a savings of a whopping $6.

TIME Syria

U.N. Official: Syria’s Last Chemical Weapons Are ‘Inaccessible’

Kaag, special coordinator of the OPCW-UN joint mission on eliminating Syria's chemical weapons programme, speaks during a news conference in Damascus
Sigrid Kaag, special coordinator of the Organization for the Prohibition of Chemical Weapons–U.N. joint mission on eliminating Syria's chemical weapons, speaks at a news conference in Damascus on April 27, 2014 Khaled Al Hariri—Reuters

Fighting between rebel groups and government forces is blocking the removal of Syria's last chemical weapons, says mission chief Sigrid Kaag, who is calling for a truce

The last chemical weapons slated to be removed from Syria are “inaccessible” because of fighting between rebels and the government, a U.N. official said Thursday.

The 16 containers of dangerous chemical agents are located close to the capital, Damascus, in an area being fought over by both sides, the Associated Press reports.

The head of the U.N. mission in charge of destroying Syria’s chemical weapons, Sigrid Kaag, called on countries with clout over the rebel groups to help arrange the cease-fire needed to allow for the safe removal of the chemical weapons.

“Obviously the issue is that the materials leave the country as soon as possible,” she told reporters.

Danish and Norwegian ships are waiting to transport the containers from a nearby port to a U.S. vessel for destruction.

Last month it was revealed that almost all of Syria’s declared chemical weapons had been removed ahead of the June 30 deadline. However, at a U.N. Security Council meeting, several countries, including the U.S., France and Britain, expressed concern over whether President Bashar Assad’s regime was holding on to undeclared chemical weapons, Reuters reports.

[Associated Press]

TIME Autos

3 Next-Gen Plug-In Cars That Could be Game Changers

Japan Nissan
Itsuo Inouye—AP

The biggest complaints about electric cars are that they’re too expensive or have limited driving range, or that don’t have enough space for hauling gear or a family.

In one way or another, all of these issues are being addressed in forthcoming new versions of the Nissan Leaf and Chevy Volt, and a new plug-in hybrid Chrysler Town & Country—yep, a minivan—planned to hit the marketplace in the near future.

The Next Nissan Leaf
The second version of the Nissan Leaf, introduced in early 2013, addressed the sticking point for a lot of drivers who weren’t yet convinced to bite on an EV: By dropping the Leaf’s base price by over $6,000, Nissan was able to make a purely electric-powered car affordable, starting at under $19,000 once incentives were factored in.

The third-generation Leaf, due to hit the marketplace sometime around 2017, as reported by Automotive News, is expected to have a dramatically improved battery and therefore, a dramatically improved driving range. The goal is for the next the Leaf to have a driving range of 186 miles before needing a charge, up from 73 miles originally and 84 miles on a full charge for the 2014 version. If and when that happens, Nissan will be able to make a much stronger argument that the Leaf is truly affordable and practical.

The Next Chevrolet Volt
Car and Driver offers a sneak peak of the new plug-in hybrid Volt, which is expected on the market for the 2016 model year—and which gives drivers improvements in electric driving range and a cheaper base price to boot. Not long ago, General Motors announced that the price of the next Volt would start at around $30,000 before incentives, around $10,000 less than the original model. The driving range when powered strictly by battery, meanwhile, is expected to jump from 38 miles today to 50 to 60 miles in the forthcoming Volt—though likely only for a 2016 Volt with an optional more powerful (and more expensive) battery.

The Plug-in Chrysler Town & Country
Bigger, heavier cars need more power to operate, which makes the prospect of a battery-powered large vehicle problematic. The lithium batteries now in use are exceptionally heavy, and bigger vehicles would require bigger, heavier batteries—which in turn would weigh the cars down further. At some point, the math doesn’t add up, with prices for larger hybrids and EVs getting so high as to become impractical. That’s why the vast majority of EVs (and hybrids for that matter) are on the small size, and why they employ as many technologies and strategies as possible to keep their weight down.

Nonetheless, Fiat Chrysler just announced plans for a plug-in hybrid minivan, a first-of-its-kind Town & Country model that’s expected to get an astounding 75 mpg (or rather, the equivalent with electric and gas power combined), available for purchase around 2016. Chrysler anticipates its lineup will include a full-size plug-in hybrid crossover SUV by that time as well.

What’s curious is that Chrysler’s announcement comes at a time that, as USA Today noted, many automakers are pulling the plug on fuel-efficient hybrid versions of big SUVs such as the Cadillac Escalade and Chevy Tahoe due to poor sales and lack of interest from buyers. The most common reason cited for the failure of such models is that they were just too expensive to justify the bonus of getting a few more miles to the gallon.

The takeaway for Chrysler is that the next-generation large hybrids it’s rolling out must be vastly more fuel efficient than their traditionally-powered counterparts (that looks to be the case, with the 75 mpge figure), and they must avoid being astronomically expensive (we’ll have to wait and see).

TIME

Better Fuel Efficiency Is Hurting the Most Efficient Cars of All

A Toyota Prius hybrid car.
Toyota Motors / AFP / Getty Images

Why aren’t sales higher for electric vehicles and hybrid plug-ins? A big reason has to do with the technology that EVs are supposed to replace, the internal combustion engine.

Last year, Nissan Leaf sales more than doubled the total from 2012. Sales for the entire plug-in category, which includes pure battery-powered vehicles like the Leaf and gas-electric hybrids such as the Chevy Volt, nearly doubled as well last year.

Even so, automakers have recently launched major incentives and price-cutting measures in order to win over potential buyers. And the reason they’re doing so is that sales, while on the rise, haven’t been as strong as many had hoped.

“EVs have been a disappointment, compared to what we expected,” Morgan Stanley analyst Ravi Shanker flatly said, according to Automotive News. “Their cost hasn’t come down enough. Batteries haven’t gotten better. And gas prices haven’t gone up like everyone expected. And at the same time, the automakers have done a great job of making the internal combustion engine better.”

Yes, some of the explanation for why electric vehicles aren’t selling better is directed squarely at plug-ins themselves. As skeptics have pointed out since EVs hit the marketplace, the limited driving range, high initial price, and/or slow and inconvenient charging procedure of plug-in cars are deal breakers for many drivers.

But as Shanker noted, underwhelming plug-in sales can also be partially explained by the other parts of the equation affecting consumer car-buying decisions. When gas prices are high, and the assumption is that they’ll keep on increasing, opting for an electrified car makes more and more sense as a long-term money saver. Likewise, when comparing the costs of commuting and running routine errands in a battery-powered car versus an old-fashioned gas guzzling SUV or sedan, the EV can seem like an especially savvy move for the household budget.

What’s hurting plug-in sales, however, is that gas prices aren’t sky high, and few experts today are forecasting the impending arrival of $5 per gallon like they were two years ago. The other factor is that gas guzzlers are disappearing, with new studies indicating that half of the new cars sold this year get 23 mpg or better, and new cars now averaging over 25 mpg thanks to improved efficiency in the internal combustion engine, as well as automakers (and buyers) generally embracing lighter, smaller cars.

Amazingly, car dealerships and sales staffers themselves often don’t seem sold on the wisdom of going electric. Secret shoppers from Consumer Reports just concluded a broad investigation of car dealerships and plug-ins, and during the course of visiting 85 dealerships, they found out that few dealership lots have decent selections of plug-ins, and that many sales employees aren’t knowledgeable about EV sales incentives and technology. Perhaps unsurprisingly, sales staffers who weren’t fully up to speed about plug-ins were particularly likely to try to steer customers away from EVs and toward traditional cars powered solely by internal combustion engines.

“Many seemed not to have a good understanding of electric-car tax breaks and other incentives or of charging needs and costs,” the CR report stated, referring to dealership sales staffers encountered by secret shoppers. “Many also didn’t seem to recognize that for people who intend to go with an electric car, the reasons for leasing are broader than for ordinary cars, including that you don’t have to wait until tax time to receive a generous tax incentive.”

If professional car sales employees don’t understand how all of this works, and can’t (or won’t) lay out a simple, sensible case for switching to a plug-in car, and can’t (or won’t) explain the smartest way to do so, imagine how the average consumer feels.

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