So Maybe $4/Gallon Gasoline Isn't That Big A Deal After All?

By Antony Ingram

Antony Ingram

Contributing Writer BIO

Antony is an automotive obsessive: Whether it drives, sits there looking pretty or intrigues from afar, he'll talk and write about it. Automotive... More

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Gas prices in California [photo: Charlene Birkeland]

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Gas prices are rising. This we know, and it's something we can do very little about.

The increased cost of accessing crude oil, and political instability in oil-controlling nations putting a squeeze on supply, means the consumer has to foot the bill.

But as gas prices climb towards the $4 per gallon mark, will it really make much difference? The National Automobile Dealers Association (NADA) believes the impact may be minimal, and unlikely to have much effect on used car prices, either.

Back in 2008, when gas prices rocketed up from the average of $2.50 a gallon, it caused widespread panic in the industry and consumers were tripping over themselves to get into the latest gas-sipping models, while guzzlers took a tumble.

However, 2011 saw average gas prices of over $3.50 per gallon - so a slow, inexorable rise towards the $4 mark isn't the shock to the system that it was a few years back. People are largely used to the higher prices, and while nobody likes paying extra for gas, the gentler rise will be easier to cope with.

Gas prices don't only affect new car buying and your bank balance, but used car prices too. Economical models can hold their value much better, while more expensive, gas-guzzling cars can drop in value.

The biggest winners and losers? Predictably, compact cars and large SUVs, respectively. NADA's compiled data for cars between 1-5 years in age, shows that at $4 a gallon, an intermediate compact may be worth $179 more than it is now, and a large SUV $387 less.

That's not a lot, but at $5 a gallon that compact could be worth over $1,000 more, and a large SUV a staggering $5,298 less.

That's either good or bad news depending on whether you're looking to sell or buy. If you're selling your Prius you could probably get a pretty good price for it as gas prices rise, but a used buyer looking for something less economical may find some bargains out there.

All that in mind, it's still worth remembering that you should buy wisely - a gas-guzzler may look tempting right now, but it might start getting expensive to run pretty quickly - and then be worth very little when you come to sell.

Gas prices are expected to average $4 a gallon nationwide some time this May.

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