We’re in the middle of the summer driving season in America. It’s hot, humid, and costs more to drive this summer than it did last. With the advent of more discount airlines, air travel can often be cheaper than gassing up the family SUV and heading to your vacation destination. The first reason, as we are all too aware, is the price of gas. U.S. gas prices over the last year are among the highest since 2018. However, thankfully that trend has begun to reverse itself in recent months and gas prices are heading in the right direction. Gas prices over the last 12 months are well above the six-year national average, hitting a high of $4.99 a week, and Californians paid a whopping $6.43 per gallon.
Here are a few more factoids to put the price of gas in perspective, and may help you determine whether you travel this summer or plan on having a “staycation” at home.
The latest US gas prices at a glance
- National average: The current national average cost for gas is $3.52 (Jul. 11, 2024)
- Previous week average: Previous week’s average cost for gas was $3.49 (Jul. 04, 2024)
- Annual average: The annual average cost for gas in 2024 is $3.40
- Most expensive week to buy gas in 2024: May. 02, 2024 saw the highest gas prices in 2024 at $3.64
- Cheapest week to buy gas in 2024: Jan. 11, 2024 saw the lowest gas prices in 2024 at $3.05
Unless you want to move to Oklahoma or another lower cost gas state, there isn’t a lot you can do to change the price of gas. Don’t even get us started on EV’s here at Investing and Money, as they are beyond the scope of this article. So what are people across the land doing to try to lower the monthly cost of their vehicles? They’re shopping insurance rates, and at record levels. You’re writer here at Investing and Money is one of them. I noticed several months ago that my auto insurance bill with USAA was up about 25% without any warning. I thought it could be perhaps from a fender bender my son had on the policy a few months back, but that wasn’t the culprit. According to J.D. Power, half of U.S. auto insurance customers have actively shopped for a new policy in the past year, up from 41% in 2021. It’s no wonder why every other commercial we see on TV is for auto insurance. Data from Bankrate shows that in the past year, the average annual cost of full-coverage car insurance was up 12% to $2,278. This was on top of a 7% increase the year before.
So what can you do to mitigate the damage? A novel approach being offered by USAA, Allstate, Nationwide and others is a flat-fee premium based upon the number of miles that you drive. This caught my attention, as it may have for others who either use their cars sparingly or perhaps work from home. According to Bankrate analyst Shannon Martin, “More insurance companies are offering these types of plans now than before the pandemic.” In these programs, drivers typically pay a base rate for coverage and a per-mile rate on top of that flat fee. For example, if you pay a base rate of $25 per month and 5 cents a mile, if you drive 1,000 miles that month you would pay $75 in insurance. That example is close to average, as American drivers will drive roughly 13,000 miles per year, according to data from S&P Global Mobility. Yosef Khaver, an independent insurance agent in Towson, Md., tells his clients that if they drive more than 4,000 miles a year, a traditional policy will probably be more cost-effective.
If you drive more than the average and the math for the fee-based service doesn’t make sense, the other option is to raise your deductibles to lower your monthly premium expenses. As you are probably all too aware, this is the amount that you pay out of pocket before your insurance kicks in. We had a $500 deductible comprehensive policy on my son’s car when he had a fender bender. The cost to repair the car was outrageous, totally over $5,000. We paid the first $500, and USAA picked up the rest.
A couple other ideas on lowering costs include buying a less expensive car, as well as paying your annual premium in whole upfront. As you would expect, the lower the value of the vehicle the less you are going to pay in insurance. The difference between my 2010 Toyota Tundra and my son’s 2021 Toyota Corolla is significant. We pay over twice as much for the same coverage on the newer Corolla than the truck. As mentioned, by paying your premium upfront in whole, you will usually save at least 10% a year. Every little bit counts!
