Figure in costs of driving to the gas station - it gets worse!

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!