Oil jumps and stocks slide: what it means for gas money

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U.S. stocks fell on Friday as oil prices rose. The Dow Jones Industrial Average dropped 653 points, or 1.2%, and the S&P 500 lost 0.5%. U.S. crude oil climbed to about $103 a barrel, and Brent, the world benchmark, settled at $116.72, its highest since April. Reports tied the jump to fears that the U.S.-Iran conflict could flare up again. Investors also worry that costly energy can push up prices for everything else and slow spending.

Why should a teenager care? Gas is made from crude oil. AAA says the national average for regular gas fell 6 cents in a week to $4.27 a gallon as of Thursday, but it also says high crude prices are limiting how far gas can fall. This week, the Fed announces its interest rate decision on Wednesday, and the government's first estimate of third-quarter economic growth is due Thursday at 8:30am ET.

Your money: What a drive really costs

Gas prices are posted per gallon, but you pay per trip. To find the cost of a trip, you need one more number: miles per gallon (mpg), which tells you how far a car goes on one gallon.

Here is the math. Divide the miles you drive by your car's mpg to get the gallons you'll use. Then multiply the gallons by the price per gallon. A 100-mile trip in a car that gets 25 mpg uses 4 gallons. At $4.27 a gallon, that's $17.08.

Now you can see what a price change means. If gas rises 50 cents, those same 4 gallons cost $2 more. A car with better mpg uses fewer gallons, so it feels each price jump less. Carpooling splits the bill, too.

Words to know

Write what each word means in your own words.

Crude oil
Miles per gallon
Commodity

Questions

The story

In one sentence, what happened in the top story?
If gas costs more, what would you or your family cut back on first?

Do the math

Gas is $4.27 a gallon. About how much does it cost to fill a 12-gallon tank from empty? Show your work.

Your turn

Your car gets 30 miles per gallon, and gas costs $4 a gallon. What does a 150-mile trip cost? What if gas rises to $4.50?

Quiz

Car A gets 20 mpg. Car B gets 40 mpg. Gas costs $4 a gallon. Both drive 200 miles. Which costs less in gas? Circle one.
1. Car B, $20 less
2. Car A, $20 less
3. Car B, $10 less
4. They cost the same

What do you think?

Gas costs about $4.27 a gallon. Is it worth it to drive a friend across town for a $5 meal? What would make you say no? Answer in two or three sentences, and give a reason.

Answer key

Words to know

Crude oil: Oil as it comes out of the ground, before it is made into gas and other fuels.
Miles per gallon: How many miles a car can go on one gallon of gas.
Commodity: A basic raw material, like oil or wheat, that is bought and sold in large amounts.

Questions

Answers will vary: a clear one-sentence summary of the top story.
Answers will vary. Look for a specific reason tied to the story.
about $51. 12 gallons × $4.27 = $51.24, which rounds to about $51.
150 ÷ 30 = 5 gallons. 5 × $4 = $20. 5 × $4.50 = $22.50. The trip costs $2.50 more.
A. Car B, $20 less. Car A uses 200 ÷ 20 = 10 gallons, so $40. Car B uses 200 ÷ 40 = 5 gallons, so $20. Car B costs $20 less.
Answers will vary. Look for a clear opinion backed by a reason.

Optional: tomorrow's bell-ringer, before first period

Tomorrow's bell-ringer in your inbox before first period: a five-minute money-news briefing with class slides, a quiz and a worksheet like this one. Free. You don't need it to use any worksheet.