Gas prices inch back up due to oil market volatility: AAA
Increased financing costs puts some popular car models out of reach for many Americans, analysis says
Consumers saw prices at the pump rise again, but it may not last long, according to AAA. (iStock)
After declining for several weeks, gas prices inched back up again, AAA reported on Monday.
The national average price of gas increased to $3.80 per gallon, four cents more than the week before. The sudden spike in prices was due to volatility in the oil market, AAA said.
Oil prices have fluctuated over concerns that Russian oil production cuts may lead to tighter global supplies.
However, news that China has entered into another COVID-19 lockdown could signal a potential economic slowdown for "the world's top oil-consuming nation," and could prevent further increases in prices at the pump, according to AAA.
"The oil market, like the stock market, hates negative headlines, no matter how speculative," Andrew Gross, AAA spokesperson, said. "And that is why we see the oil price back over $90 a barrel. More expensive oil usually leads to more expensive gasoline, but the recent COVID-related news from China may stem this increase."
If you want to save money on your auto costs, you could consider changing your auto insurance provider to get a lower monthly rate. You can visit Credible to shop around and find your personalized premium without affecting your credit score.
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In October, President Biden announced the release of an additional 15 million barrels of oil from the emergency reserve, saying it would lower gas prices and bolster domestic oil production. The decision is part of the administration's 180-million-barrel drawdown that was announced in the spring.
Biden has also targeted oil and gas companies over the $100 billion in revenue they have earned in the past six months. Last week at a press conference, Biden said that oil companies must invest their record-setting profits to lower costs for Americans and increase production, or face additional taxes on those earnings.
Biden said that if these companies passed their profits from the last six months on to consumers, gasoline prices could drop by an additional 50 cents.
If you are shopping around for new auto insurance, you can use the Credible marketplace to compare multiple providers and find your personalized rate in minutes without affecting your credit score.
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Consumers also face higher costs for financing car purchases, analysis says
It's not just gas prices that are on the rise. The Federal Reserve last week announced its fourth 75 basis point rate hike this year. Economists said that it's likely that interest rates will increase one more time this year as inflation remains well above the Fed's 2% target.
Interest rates paid on car loans climbed to 5.7% in Q3 2022, the highest rate since Q3 2019, according to Edmunds. Rising borrowing costs and rising car prices have put some popular car models out of reach for many Americans, according to a recent analysis from the automotive search engine iSeeCars.
New car prices soared by roughly 29% in August compared to August 2019 and used car prices have increased by 52% in that same time.
Income, however, hasn't kept pace and only increased 13% in August, compared to August 2019. As a result, new car affordability dropped 13.3% from August 2019 to August 2022 and used car affordability declined 26.7%.
"Due to supply chain shortages and increased demand, the rising prices of new and used cars have outpaced income growth," iSeeCars Executive Analyst Karl Brauer said.
"People still need to replace their vehicles, so the resulting drop in affordability means shoppers are either taking longer loan terms and paying higher interest rates, putting down less money for a down payment, or even forgoing the kind of car they originally wanted for a lower cost model in order to make ends meet," Brauer continued.
If you are looking to save money on your car costs, you could consider changing your auto insurance provider to get a lower monthly rate. You can visit Credible to shop around and find your personalized premium without affecting your credit score.
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