We're facing $4-per-gallon gasoline this year, oil-industry watchers tell us. Meanwhile, a former president of Shell Oil says that prices could reach $5 per gallon in 2012.Already there's a rising spirit of panic among American consumers. Some will be tempted to dump their current cars for more fuel-efficient models, while others will fall prey to the latest gizmos and concoctions from the auto parts store.

Don't be one of them.

What makes sense is to think about the way you use your car. Then change your driving habits. If you decide that you need a new car, shop smart for a fuel-efficient model. Strategy is what you need, so we've organized a number of sensible measures that will let you ride the rising tide of gasoline prices with minimal distress.

Behind the Prediction
As the chief of Shell Oil's operation in the U.S. from 2005-'08, John Hofmeister has some tough things to say about energy policy in America. Now the head of Citizens for Affordable Energy, a nonprofit advocacy group that he founded, Hofmeister tells Edmunds that the U.S. is headed for record-high gasoline prices if it continues to produce only 7 million barrels of oil in the U.S. per day, since the nation actually uses 20 million barrels per day.

Put such limited supply together with U.S. demand that has now reached the same extreme levels that we experienced before the business recession, plus what Hofmeister describes as "unprecedented" increased demand in Asia, and the result is higher crude oil prices. He says, "It's my expectation we'll see retail prices of $4 per gallon in 2011 and it could get to $5 in 2012."

Compared to the previous escalation of gas prices in 2008, Hofmeister notes that the reaction to the price jump will be "greater panic and greater distress." That's because the budgets of American families have already been hammered by the ongoing recession. For example, real median household income fell 4.2 percent between 2007 and 2009, according to the U.S. Census Bureau. Gas price increases "will be dramatically more frightening to people, particularly those who are at or near median wages in this country," Hofmeister tells us.

Survival Strategies for Car Owners
So that's the doom-and-gloom scenario. Here is some advice from Edmunds experts on how to cope:

Figure out the mileage you get in the cars you drive now: This will help you see the actual impact of the price increases, measure any improvements you attain by changing your driving patterns and help you decide whether it would make sense to move to a more fuel-efficient car. In addition to paper-and-pencil recordkeeping, you can use online sites such as Fuelly.com to track mileage and gasoline costs online.
Realistically assess what rising gas prices mean to your family. The impact might not be as dire as you think. Or if gas prices do threaten to sink the budget, it might be time to reexamine how your household is spending money overall.