Why Shopping For Low Gas Prices Is A Losing Proposition

I know a couple people who will drive five miles out of their way, ten miles round trip, just to save a nickel per gallon. I’m sure you know several folks that might even drive further to save a nickel or dime per gallon.

I never worry about saving a few cents at the pump. When I need gasoline, I usually just pull in to the first gas station I see. That is because driving out of your way to save a few cents doesn’t make much sense. Usually, the savings at the pump are eaten up driving around to get the bargain.

Once again, I will use my trusty spreadsheet to illustrate my point. The results are shown in the two tables below (click on the table to make it larger):

For example, lets assume you drive 10 miles out of your way (round trip) to save four cents per gallon at a cheaper gas station. Let’s also assume you buy 12 gallons worth of gas. Looking at the top chart, we can see that you saved 48 cents.

Now let’s assume you paid $4.00 per gallon of gas. Looking at the bottom chart, which assumes the car averages 20 miles per gallon, we can see that you spent $2.00 driving to the station with the lower gas price. So in reality you lost $1.52 ($2.00 – 48 cents) in your quest to save four cents per gallon!

Your loss would be even greater if the price of gas was higher, or you drove even further to save the money, or your car got less than 20 mpg.

For this example, even if you only drove five miles round trip and the price of gas was only $2.50 per gallon, you’d still lose 15 cents.

When shopping around for gasoline, you should naturally expect any savings at all to become less as:

1. The price of gasoline rises.

2. The amount of gas you put in your tank decreases.

3. The miles you drive to realize the “savings” increase.

4.   The average vehicle MPG decreases.

So next time your driving around and your tank is running on empty, don’t fret about finding the cheapest price. Unless the competing gas stations are within a couple blocks of each other, the odds are you won’t be saving much money anyway.



Comments

  1. 2

    says

    Hi Juliet,

    If we did that here in the States (fix gas prices), membership stores that offer discount gasoline (like Costco) would be filing for bankruptcy!

    Two other notes:

    1. I love the word “petrol.” In fact, I am going to write my local Congressman and ask him to sponsor a bill that would make “petrol” the official American word for gasoline.

    2. I’ve always wanted to go to South Africa. I hear it is very beautiful.

    3. (I know I said 2 things, but I just thought of something else…) I have a beautiful Rhodesian Ridgeback – Ridgebacks are the best dogs on the planet! I know Zimbabwe Rhodesia isn’t South Africa, but if I remember my high school geography, it’s right next door. No real point to make here. I’m just rambling again… :-)

    Len

  2. 3

    Steven says

    There is a gas station near me at $2.83 per gallon vs $3.00 pretty much everywhere else.

    So for me, I save 17 cents per gallon if I drive a little further out to get to that gas station.

    I think that’s worth it.

  3. 5

    Jamie Stewart says

    Gas prices these days are just getting higher, i think the government should focus more on alternative energy.

  4. 6

    Kat says

    When filling up a large empty tank those few cents can add up, you really need to figure it out if it’s really worth the drive for your car. Like you said, it’s all in the math. Another thing, I’ve noticed that often cheaper stations are VERY busy. For example; Costco where there always seems to be a long line of compact cars waiting 30 minutes to save 30 cents.

    • 7

      says

      I too, more often than not, see cars waiting in line three, four and even five deep waiting to save maybe a buck a tank. It makes absolutely no sense to me either.

  5. 8

    Rachelle says

    We don’t drive around looking for a cheaper place to buy gas, but we do try to time our purchase as prices go up at the weekends and especially long weekends.

    • 9

      says

      Where I live, it seems like there is no rhyme or reason to when they decide to rise gasoline prices, Rachelle. In fact, the price jumped 8 cents two days ago! :-)

  6. 10

    says

    You’re totally right – people need to weigh the distance TO the cheaper station against their savings.

    That said, there are several free smartphone apps that find your GPS coordinates, scan the cost of gas at all the stations nearby, and then show you a list of both cost and distance.

    Using this, you can see if there is a gas station within a similar distance that are cheaper.

    Alternatively, if you’re taking a road trip down the interstate, you can check gas prices 10, 20, 30 miles down the road to see if you should fill up now or later.

  7. 11

    says

    We have a little neighborhood gas station that usually runs a nickel to seven cents more than everyone else. There is hardly a time there are more than two cars being filled up at any given time, including ours, so it is always a quick easy-in-easy-out. The older we get saving a nickel here or there has to be weighed against the time spent looking for the bargain :-).

  8. 13

    says

    I found a Co-op that does save money on fuel and I can purchase from any retailer in North America ..sound interesting?
    I built a site explaining it .. they are currently only taking membership apps from Canada and the USA.

  9. 14

    says

    In my neck of the woods the price differential is up to 30 cents between stations. While I don’t drive out of my way to save I do check the Gas Buddy app to see if I should stop near home, the office or the small town where I shop. I’m absolutely willing to save the $4 on a tank because it’s not going out of the way.

    • 15

      Len Penzo says

      That is definitely the key, Andrea; if the gas station is on the way then there is no penalty whatsoever!

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