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 $3.00 per gallon of gas. Looking at the bottom chart, which assumes the car averages 20 miles per gallon, we can see that you spent $1.50 driving to the station with the lower gas price. So in reality you lost $1.02 ($1.50 – 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 (63 cents – 48 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 you’re 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.
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Hi
Interesting.
Here in South Africa – where I live – petrol prices are fixed inland and at the coast. So, one needs to drive really far for a cheaper price!
Juliet
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
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.
It all comes down to the math, Steven. Whether it is a good deal or not will all depend on how far away the cheaper gas station is.
Gas prices these days are just getting higher, i think the government should focus more on alternative energy.
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.
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.
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.
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! 🙂
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.
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 :-).
I’m with you guys! It usually just doesn’t pay to shop for a couple cents of savings.
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.
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.
That is definitely the key, Andrea; if the gas station is on the way then there is no penalty whatsoever!
You know, I figure my time spent having to drive to that further away gas station, to get that nickel a gallon cheaper gas, negates any savings that I might get. Time is money.
In economics this would be called opportunity cost. It’s the same as those people waiting 4 hours in line to save $30 on a gadget. That time can be better spent elsewhere.
You’re absolutely right that driving any kind of distance can negate your savings. For me, I make a mental note of which of the stations I regularly pass have lower prices than the others, and I normally fill up there. The difference can easily be twenty cents per gallon or more in my area. I think there’s a happy medium between driving out of your way to save a nickel, and pulling over at whatever station is there when you hit empty.
I know which gas stations have lower prices so whenever I see one, I go for it. I wouldn’t want to go further until I come across for better prices.
We drive in the same areas most of the time. Certain gas stations are always cheaper than others. We plan ahead to pick up gas when we are passing the cheapest stations. We never drive any distance to fill up on the cheaper gas, we do so when we are passing stations we know offer the best price. I like saving cents per gallon by not paying for a station’s participation in national advertising campaigns. I like to vote with my dollars encouraging the cheaper stations. Also most stations give a price break for cash and charge more for credit purchases, so we always pay cash. Stations which advertise “same price cash or credit” have invariably raised the price of cash paid gas to the higher price of credit paid gas. In financial life, you have to be frequently running time / cost benefit analysis in your head to get the best value for your money. Don’t look at that as a burden, see it as a challenge which you can win!
I have a few favorite gas stations – around here the price can vary by 25 cents a gallon – I honestly don’t know how the higher priced stations survive, unless it’s just location, right off the freeway, at the first/last exit before a long stretch.
Anyway, there’s a station on the way to work and one near home that are about 5 cents higher than the cheapest, but 20-25 cents cheaper than the most expensive. I go to which ever one is closest when I realize I’m almost out of gas.