Gas Prices in Perspective

Curiousity gets "piqued", not "peaked". Actually "peaked" (peek`-ed) is a synonym for tired, which is also not what you want.

I enjoyed your gas price study - something which I've known for a while - but nicely said.

My take on it (using your raw data) is this:

If I have to drive somewhere between zero and five miles out of my way to find the cheapest price - then I have to drive between zero and ten miles more. If my car manages 21mpg - then I'll use between zero and half a gallon of gas in seeking that lowest price (assuming I actually KNOW the cheapest price - which is unlikely).

If gas is costing me the lowest amount ($2.82) then I could expend as much as $1.41 if I drive 10 miles in order to save 17c per gallon. In the worst case, I need to be sure that I purchase at least 8 gallons just to break even!

In actuality, gas is not the largest cost in operating a car - depreciation, maintenance, etc can easily overwhelm the actual gas prices. In fact, if you drive even a few miles out of your way to get better gas prices, you'll almost certainly lose money.

Worse still: If you have to drive an extra 5 miles because you use a gas station that's 2.5 miles away - then at typical in-town speeds of around 30mph, it'll take you 10 minutes more. If you pay yourself minimum wage for undertaking this task (say $7 per hour) then you need to earn a savings of at least $1.16. Add in the 70cents in gas and $1.00 in depreciation and servicing on your car - and you now need to save nearly $2.86 in order to make it worth your while. At 17c/gallon savings, you now need to buy 17 gallons - just to earn minimum wage!

So even in the absence of better ways to spend your TIME (eg hunting for lower prices on Tylanol) - you're probably not saving money by shopping around for gas - but if you figure in your time and the costs in fuel and depreciation...it's NEVER worth shopping around for gas.

I drive a MINI Cooper - so I get about 30mpg - but I only have a 12 gallon gas tank. I worked out that with all of the costs I could only drive at most 1.2 miles out of my way (and 1.2 miles back of course) in order to find 5% cheaper gas...and only then if my tank was nearly empty at the time and I had nothing better to do with my time. However, if I spend that time working overtime at work (I earn $40 per hour) - then I dare not use a gas station that isn't directly on my route home.

Thanks again for your article!

Steve Baker <sjbaker1@airmail.net>

I saw this article at /. and people have been making the observation that a lot of the hype that goes along with gasoline comes from the fact that demand for gas is inelastic. No mater how much the price goes (within reason) I still have to drive. These other products are much more flexible. I don't really need red peppers, soda, chips or ice cream. Gas is a necessity, especially since so many Americans live in the suburbs and have to drive a considerable distance to get into work. In my experience I pass five to six gas stations along my daily route. It just makes sense for me to buy gas at the least expensive station. A lot of the other items you compare gasoline to are almost luxury items (not all), and I can do without them. Gas keeps my attention because right now I can't do without it.

Americans obsession with gas is completely justified. Not only is gas expensive, but by using it we are doing immeasureable damage to the environment. Public transportation on a much larger scale needs to be built in all major cities. I also think that there should be tax breaks or some other incentives for those who decide to do the responsible thing and take the bus or train.

So what is the price of a gallon of Starbucks Coffee these days?

Brandon, terrific article, truly well researched and of the highest level of nerdery.

A thought. While the price difference for a bottle of Gatorade between Walmart and CVS might be drastic, I don't think it begins to compare with the difference between the cost of alcohol in a liquor store versus a bar or restaurant.

A 750ml bottle of Bombay Sapphire gin runs about $22 in a liquor store, but you can pay as much as $8 for a gin and tonic made with the just an ounce or two of that same liquor in a bar. Bottles of wine that fetch just $10-20 in a liquor store will run upwards of $100 in a fine restaurant. Even Shiner Bock, at $6 a six-pack, will average $4 in a bar these days.

I mention this because I saw that the average yearly household expenditure for booze was about $489, and I realized that its distinctly possible (and historically proven) that I can do that in a weekend. But in a bar and restaurant, you're paying the premium for the ambience, the setting, the social atmosphere and the service. I'm willing to spend the extra dollars for all those things. So what does the CVS shopper pay the extra money for? I think its convenience. I think the average American has become so lazy, so decadent, that the extra cost is worth it because it saves them the walking in a big store, the driving to a big store, and the thinking about the purchase.

In my line of work, which is the mortgage business, the cost value and best use of my time time will typically carry the most weight in my decisions about where to buy gas or pharmaceuticals. I prefer the stations that have the automatic pump lever on the handle, so I can clean my windshield or answer a phone call while the gas pumps. When I pick up my prescriptions, I use the drive through for the same reason, I can make phone calls or review email while I wait and also avoid those "convenient" but less economical items like dog food or batteries. Your comment about scrambling for pennies while overlooking the quarters is well taken. I also agree with one of the other comments that vehicle wear & tear should have an important role to play. From a worldwide perspective I believe the USA will rank among the very lowest in gasoline prices. We are spoiled with our abundance! When I lived in Brazil gas prices were double those here in our country. Now if you could only come up with a formula to justify the monetary savings of my speeding!

Although a previous commenter hinted at this, I think it's worth making the point a different way. Comparison shopping for gas is easy, physically. Almost every gas-buying experience is very much like every other gas-buying experience. You pull right up to the tank, you get out, and you fill it up. (Assuming self-serve.) You may have to wait for someone else to finish up first, but waiting means sitting in your car. Driving to the cheapest nearby station doesn't require any real WORK on your part.

On the other hand, shopping in a convenience store or a pharmacy is very much different from shopping in a supermarket or department store. At the very least, once you've found the one or two things you're looking for, you'll need to wait behind a line of people who are probably NOT only buying one or two things. Sometimes they're buying one of everything the store has. And the person at the register you've chosen (which is one of the 3 that are actually open out of the 15 available,) is inevitably utterly unable to use the scanning thing to ring up stuff. And he or she will probably once or twice hit the button that makes the light start flashing so someone can come and tell him or her which key to press to start over so he or she can ring everything up again, trying to get it right this time. And then the person in front of you has to write a check because she's afraid of new-fangled machinery with buttons where you have to slide your card through. In fact, she's never heard of a check-card. And she'll stand there filling out her register in the back of her checkbook, which she has to lick her fingers to flip through, before ripping the check out and giving it to the cashier. She'll also not start writing the check until the entire ringing-up-of-items process is over.

Then it's your turn, and the two items you're getting won't scan right, probably because the cashier has no idea how to do anything, and then he or she will have to key in the UPC code by hand. And hit the flashing light again to get the manager to come over again and use her key to reset something. Again.

In other words, supermarkets and department stores SUCK.

Let’s not forget about the amount of money people could save on credit card interest. I always get a kick out of someone who will shop around crazy for the cheapest gas and other necessary items and then put it on a credit card and pay 21% interest on it every month. Granted, some of us must use credit cards to survive, but I know of people who use the credit card for convenience and then don’t pay it off, all the while complaining about the price of things.