Low gas prices seem to be all anyone is talking about these days. If you’re shopping for a used car in Oklahoma City, these low prices raise some big questions. For example, now that gas is cheap, do you need to worry about fuel economy? What does cheaper gas really mean for you?

Why Gas is Cheap: Understanding Gas Prices

Before digging into your best choices for used cars, it helps to understand why the price of gas is so low. Understanding what sets the gas price helps in choosing a car or truck that will be easy on your wallet for years, not just for right now.

So what exactly goes into the price of gas? There are actually many different factors that all have an effect on what you pay at the pump.

• The Price of Oil – Obviously one of the biggest pieces of the puzzle is the raw oil price. As oil gets cheaper, gas does too. However, oil doesn’t set the gas price by itself. Indeed, it’s sometimes not even the primary factor. That’s why oil can go from $80 to $50 to $25 per barrel, but the cost of gas only changes by a dollar or so.
• The Cost of Refining – Along with crude oil’s raw cost per barrel, the cost of refining and transporting the oil is also built into the pump price. Refineries sell gasoline to retailers and gas stations at a profit. But that profit margin changes daily based on the cost of crude oil, the efficiency of the refinery, and the price of gasoline from other competing refineries. The prices refineries set are based on very complex calculations and change every day – which is why gas prices change so often as well.
• Federal, State, and Other Taxes – Depending on where you live, you might pay different amounts in gas tax on top of the regular price of gasoline. Federal gas tax is currently 18.4 cents per gallon of gas, and 24.4 cents per gallon of diesel. Oklahoma also levies taxes on gas, currently 17 cents per gallon for gas and 14 for diesel. Currently Pennsylvania has the highest gasoline tax in the country, at 50.4 cents per gallon in state excise tax. Some cities and municipalities also have fuel taxes in addition to the state and federal ones.
• Other Factors – Along with these major factors, other things can play a small role in how much you pay for gas. For instance, if a gas station has a car wash installed, it can often charge less for gas. The increased revenue from the car wash can offset slightly lower gas prices. In turn, low gas prices bring in more customers and more potential car washes.

So why is gas so cheap right now? The big reason is too much oil supply driving down the price. A combination of less demand from China, more supply from Saudi Arabia and American oil producers, and the possibility of open oil exports from Iran are creating more oil supply than the world needs. This drives the price of crude oil down, which in turn results in lower gas prices.

What Low Gas Prices Mean for You

While low gas prices might seem like the perfect reason to buy that big pickup or SUV you’ve always wanted, keep in mind that gas is not likely to stay cheap forever. It took many factors to bring the cost of gas down as low as it is now. If any of these factors changes, gas prices could easily start climbing once again.

Instead of rushing out and buying a big gas guzzler, now might actually be the best time to consider a more fuel-efficient vehicle. Compact cars and hybrid vehicles are more common and of higher quality than ever before. However, cheap gas has lowered the demand for these fuel-efficient vehicles. That means you can pick up a great fuel-efficient car at a great price and enjoy all the benefits when gas prices go back up.

You might be wondering just what those benefits are. Here are a few of the biggest benefits of fuel-efficient cars and hybrid vehicles:

More Efficient Cars Have a Lower Cost of Ownership: One of the biggest benefits of more fuel-efficient cars is that they cost less to own over time. Gas is only part of this lower cost, too. Along with spending less on fuel, compacts and hybrids also have:

• Less expensive maintenance and upkeep
• Lower insurance premiums
• Buying incentives such as income tax credits

Fuel-Efficient Cars are Better for the Environment: Another benefit of fuel-efficient vehicles is they emit less greenhouse gasses and toxins. As 2016 is already shaping up to be one of the hottest years on record, it’s not a bad idea to consider a more efficient and environmentally-conscious vehicle.

Fuel-Efficient Cars Hold Their Value Better: A final reason to consider a more efficient car is that they have hold on to their value as well or better than larger trucks, SUVs, or crossovers. This will be even more true if gas prices go back up and demand shifts back toward smaller vehicles again.

Of course, the ultimate choice of what car or truck to buy is up to you. You’ll have to consider your own needs and what you expect to use your car for to decide which one fits you best. After all, if you plan on hauling lots of cargo or moving a big family, a small car isn’t going to be right for you. Fuel economy is only one part of the larger picture you’ll need to consider when buying a used car in Oklahoma.

Not sure what kind of car is right for you? Our experts here at The KEY can help! We’ll work with you to find the best car for your lifestyle and your budget, even if you have poor credit or need special financing. Call (405) 526-7000 to learn more or visit our Facebook page to get more tips!