The cost of….gasoline
By Bruce Gillespie • Bankrate.com

First, the good news. While our neighbours to the south face record-setting prices at the gas pumps this week, with the average price topping out at US$1.80 a gallon, the average gas price in Canada remains well below the 84-cent per litre record set in March 2003.

The latest figures show the average retail cost of a litre of gasoline is 74.3 cents, down 6.8 cents from the previous week. Of course, that's not an apples-to-apples comparison to U.S. gas prices, but the point is that Canadian gas prices are trending downward rather than up.

Now, for the bad news: It won't last long. "I dare say that come sometime in April or May, we will see that 84-cent average exceeded," says Michael Ervin of MJ Ervin & Associates, petroleum marketing consultants in Calgary.

"All indications would point that way. There could be some mitigating circumstances if crude oil prices continue to fall, but the real sticking point is demand for gasoline keeps increasing but refinery capacity has not been increasing to the same degree," he says.

That means you can expect prices at the pumps to start climbing again this summer, when Ervin says demand for gasoline typically increases by 25 percent over winter demand, further stressing the already-tight gasoline inventories.

As of April 6, 2004, the national average price for mid-grade fuel was 81.0 cents and 84.1 cents for premium. Not surprisingly, Canadians in the more remote areas of the country pay the most for gas, with the most-expensive fuel selling for 92.9 cents in Yellowknife. Winnipeg's drivers currently pay the least for gas, only 54.1 cents a litre.

Fight to save cash
What can you do to prepare for further price increases? The best defence is a good offence when it comes to pump prices.

For starters, comparison shop for the cheapest gas in your neighbourhood. To see if it's worth driving a bit farther than normal for cheaper gas, check out Bankrate's gas price calculator.

Want to burn as little of that high-priced gasoline as you can? Here are some tips:

• Make sure your vehicle is in proper running condition. It is most fuel efficient when it is running correctly.
• Check the owner's manual and make sure you are using gasoline with the proper octane level. Premium-grade gasoline won't make your car run any better unless the motor was built to burn premium -- and that's only about 18 percent of all vehicle engines.
• Combine errands into a single trip and use the family's most fuel-efficient car when doing extensive driving.
• When the time comes to replace your car, consider buying something smaller and more fuel-efficient, or take a look at cars that use another source of fuel altogether. For more information, check out our auto adviser to see if a hybrid car is right for you.

All figures from MJ Ervin & Associates.

Bruce Gillespie is a freelance writer and editor in Simcoe, Ontario.