By now, you're familiar with the scenario, as you've done it so often. You drive your portfolio to your local stock station and pull up to the pump. You choose one of the stock selections -- Deep Value, Small Cap, or Blue Chip. You stick the nozzle into your portfolio's brokerage opening and squeeze the handle. (Some stations also serve up Penny Stock, but if you're lucky, your tank won't accept that nozzle.)
These days seem different, though. Every time you fill up with a new stock, the price seems to have gone up 10% -- and that's just in the past week or two.
Back to gas
I suspect you caught my analogy. Gas prices are acting like the prices of many volatile stocks. The average price of regular gas in the United States has gone from $2.22 in June to $2.30 in July to above $2.60 in August, and it's still climbing. A year ago, it was less than $2.00, and two years ago it was near $1.50.
The price of gasoline is becoming a bigger and bigger problem for many Americans. According to an Associated Press/AOL News survey, 64% of Americans expect rising gas prices to create financial problems for them in the coming six months, up from the 51% who thought so in April.
How can you combat it? Well, gas isn't a completely discretionary expense for most of us, unfortunately. If the price of breakfast cereals went through the roof, many of us would simply rediscover the glory of eggs or bagels. If you have to drive to work, though, you're stuck. Still, there are some ways to temper the pain:
- Be aware of how you can save money when your vehicle is on the road. Keep your car as light as possible. If you usually keep your anvil collection and pet boulders in the trunk, leave them at home. Try not to speed or drive aggressively -- going slower and safer will conserve gas. Don't run the air conditioner unless you need to.
- Consider not driving, if possible. Look into carpools for work and combine errands. See whether there is any handy public transportation available.
- Keep your car in good condition. If it's overdue for a tune-up and has overinflated or underinflated tires, you may be losing 5% of your fuel efficiency, needlessly. And when gas is approaching (or has exceeded) $3.00 per gallon for many of us, 5% means a full 15 cents per gallon.
- Seek out gas vendors with the lowest prices. Websites such as GasPriceWatch.com and GasBuddy.com can help you zero in on your best bets locally.
- Of course, if your car is a big gas-guzzler, you can save a lot of money by switching to a more fuel-efficient vehicle. According to the math at the federal government's Fuel Economy website, if you drive 15,000 miles per year and pay $3.00 per gallon of gas, you can save around $750 per year if you switch from a car that gets 20 miles per gallon to one that gets 30. Hybrid vehicles such as the Toyota
(NYSE:TM)Prius, the Honda (NYSE:HMC)Civic hybrid, the Ford (NYSE:F)Escape hybrid, GM's (NYSE:GM)Chevrolet Silverado hybrid, or the upcoming Nissan (NASDAQ:NSANY)Altima hybrid might save you even more. (See what your car costs you by using this fuel cost calculator.)
- Don't buy more expensive gas than you need to. Check your owner's manual or ask your mechanic what your minimum octane requirement is. Some people think that they're treating their car better by serving it premium gas, when they're just spending several dollars more than necessary each time they fill up.
- Here are some more tips from our LivingBelow Your Means discussion board.
- Finally, one little approach I'm taking is to buy gas frequently. Since the price seems to be going nowhere but up for the foreseeable future (though I hope I'm wrong, of course), when my tank is down a quarter, I fill it up. I figure I'm probably saving a little money, because if it costs me $2.65 per gallon to buy four gallons today, it might cost me $2.80 to buy those same four gallons in a week or two.
Now consider stocks
My little buying-gas-frequently trick is one you might want to consider when you're buying stocks, too. It can be a smart way to invest in a stock in certain situations. For example, if you really want to buy $5,000 of stock in Starbucks, but you think it's probably overvalued right now, you could buy a little of it now. Perhaps spend $1,000 or $1,500 and then wait a while. If the price sinks to a more reasonable level later, you could then spend the remaining $3,500 or $4,000. If it keeps rising, you could stay put or buy a few more shares. The idea is that you're hedging your bets a bit, not committing yourself wholeheartedly since you're not wholly convinced of the stock price's attractiveness. If the stock plunges, you won't have put all your money in. If it keeps rising, you'll at least make some money.
In our Inside Value newsletter, which focuses on undervalued investments, lead analyst Phillip Durell occasionally employs a similar strategy. (Inside Value's recommendations are doing rather well, too -- read about our impressive newsletter performance.) A few months ago, for example, he recommended that investors consider plunking a third of a full investment in shares of Home Depot
Lest you find yourself depressed by rising fuel costs, I offer this uplifting vision from Dave Richards in the San Francisco Chronicle:
With the decrease in cars on the road, traffic ceases being such a problem. . Think about it. We won't drive to Costco
(NASDAQ:COST)or Wal-Mart when we can walk down to the corner store for some milk and eggs and cookies. That neighborhood movie theater, run down or showing vintage films, suddenly sounds like a fun date, much more attractive than the multiplex in some faraway mall. Suddenly, we walk places we never would have, our health improves, we lose weight, and we meet our neighbors and get to know them, because they are out walking to the neighborhood grocery as well. Instead of driving miles for dinner, inviting your neighbors over suddenly sounds way more affordable, and everyone walks home.
Doesn't sound so bad, does it?
Learn more about what some Fools think about the energy industry's state of affairs and its implications for investors:
- Chuck Saletta: The Price of Gas and Stocks
- Dan Bloom: Forget Oil. Buy Telecom!
- Tim Beyers: Energize Your Portfolio
- Robert Aronen: The Oil Moat
- Mark Whistler: Mobilizing Oil Dividends
- Rich Smith: $60 a Barrel? Sell Big Oil!
Costco is a recommendation of the Motley Fool Stock Advisor newsletter.
Selena Maranjian 's favorite discussion boards include Book Club , Eclectic Library, and Card & Board Games. She owns shares of Home Depot, Costco, and Wal-Mart. For more about Selena, view her bio and her profile. You might also be interested in these books she has written or co-written: The Motley Fool Money Guide and The Motley Fool Investment Guide for Teens . The Motley Fool is Fools writing for Fools.