Friday, 20 April 2012

Don’t Drive Across Town for Cheap Gas-- Seriously, Don’t Do It

Summer is fast approaching, and with it, higher prices at the pump. While it may make you feel better to drive to a neighboring town to secure cheaper gasoline, it’s almost always more expensive to make the trip. Here is the truth, the math, and some ideas for better ways to spend your money.

$4.00 per gallon seems like a princely sum to pay just for the ability to burn it all transporting yourself from one appointment to the next. So, naturally, $3.95 sounds a LOT better. But unless the nickel-cheaper gas is selling at the filling station immediately next door to the more expensive stuff, you’re better off completely ignoring the cost and just filling up at whichever station is nearest to you. Why?

Let’s use some average numbers for cars. Your vehicle will differ, but this will give an idea as to how the numbers work out when bargain shopping for gasoline. For our example, we’ll use a vehicle with a 15-gallon gas tank. The average combined fuel economy of the car is 25mpg. The service station with the $4.00 gas is next door to our home, but the discount fuel is 5 miles away.

1. Price Only

Gasoline prices seem to bewitch people. You’d never drive a 10-mile round-trip to save $0.75 on a $60 item, but when you drive five miles each way to save a nickel per gallon on a fill-up, that’s exactly what you’re doing. Consider: A full, 15-gal. tank of fuel at $4.00/gal. costs $60.00. A full, 15-gal. tank of fuel at $3.95/gal. costs $59.25. Savings = $0.75. What if you only have a 10 gal. tank? You’ll pay $40 and $39.50 respectively, for a full tank. $0.50 is not much savings!

2. Mileage Matters

If it feels better to get the lower price, and you think the $0.75 is worth the trip, you still lose. You’ll travel 10 miles to get the cheap gas, but you’ll burn more fuel driving there and back than you’ll be able to buy with the money you save. At 25mpg, and assuming you leave your driveway and make the round-trip with no traffic and under optimal conditions, you’ll use 0.4 gal. of gas. At the discounted rate of $3.95, you’ll have to pay $1.58 to buy the 0.4 gal. you’ll use to drive to and from the station. Remember, this trip was undertaken to realize a $0.75 total savings. But instead, you’ve now lost $0.83. Would you drive across town to deliberately spend $0.83 more on a $60 purchase?

3. Higher Prices = Less Reason to Travel for a Deal

Every time the cost of fuel goes up, the cost per mile traveled goes up with it. And it consequently makes even less sense to drive out of your way to save a few cents. At $4.50 and $4.45 per gallon at our dueling stations, you’ll still only be traveling for a $0.75 total discount, but now it cost you $1.78 to make the 10-mile trip. Now you’ve spent $1.03 more than you would have if you just bought the $4.50 gas.

4. What about a HUGE Sale?

In the above example, the nearby station offered $4.50 gas. What if the 5-mile-away station had a HUGE sale resulting in $4.25 gas? You’ll spend $67.50 and $63.75 respectively to fill up, resulting in a savings of $3.75. But, you’ll spend $1.70 in extra fuel costs for the privilege. The total savings on filling your tank = $2.05… about a 3% savings. If you were buying any other item in the $60 price range, would a 3% discount entice you to drive across town? Chances are you’d laugh if you saw an advertisement for a HUGE 3%-off sale.

5. Time is Money

We haven’t accounted for your time in these examples, but you can safely assume that the 10-mile round trip (driving time only, unimpeded, at 55mph) will add a bare minimum of 10.9 minutes to your fueling experience. If you make minimum wage ($7.25/ hr), that 10.9 minutes of your time is worth $1.32. Now, even the HUGE sale example is only worth $0.73 in savings. You get the idea – it’s no deal to travel for gas savings!

6. Do This Instead

In lieu of the cross-town fill-up trip, spend a few minutes making sure your car is ready for the summer. Check the air pressure in your tires, test the battery charge, make sure all exterior lights are functioning and swap out your windshield wiper blades. That will take you about the same 10.9 minutes you formerly spent driving around looking for cheap gas, and is a much better way to spend your valuable time.

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