June 10, 2008

Gas Price Irony

One of life's little ironies. The higher gas prices go, the more likely people are to go out of their way to save a few pennies per gallon. Now, this might not seem ironic at first, but think about it - the higher the base price of gasoline, the *LESS* important ten cents is.

I've made a chart that demonstrates all of this, but I'll try to explain it as well. Some people will get the chart better, some will get the words. So, I'll do both.

Back in 2000, when gas was $1.50 a gallon on average, (this is for my fellow Americans, btw, I don't know what other countries' gas prices or gas buying habits are), it made sense to do a little driving to save 10¢. Because, that 10¢ reprented 1/15 of a gallon - and on a 15 gallon tank of gas - that's an extra gallon of gas for the same price of a fill up. I'll come back to this example in a minute.

Today, the average price of gas is hovering close to $4.00 a gallon. So a savings of 10¢ is only 1/40 of a gallon - or (on that same 15 gallon tank) - an extra 15/40 or 0.375 gallons per fill up.

Now, lets put that in a little perpective, back at $1.50 a gallon, driving 5 miles out of your way (and thus driving 5 miles back - for a total of 10 extra miles) might have made sense. If your car gets 20 mpg, then that extra gallon you got (see two paragraphs ago) paid for the extra drive - and still gives you 10 more miles of driving.

Today, at the $4.00 mark, with a 15 gallon tank, you'd have to drive less than 3.75 miles out of your way (7.5 mile round trip) to even break even. (You get 15/40 gallons extra - or 20*15/40 miles, which is 7.5 miles.)

Let me put it this way, the amount of "Free gas" you got by shopping around back at $1.50 is a whole lot more than the amount of "Free gas" you get now.

I do understand that "Every little bit helps" - but not when you are actually using *more gas* than you are getting by shopping around. In every way, you are actually paying *more* for gas, if you drive farther than you save.

Now, if the cheaper gas is across the street, and you have more than fumes in your tank, of course it's cheaper to drive over there, (unless there is a huge line and you leave your car idling while you wait).

Also, a key feature that neither the chart nor my examples take into consideration is the value of your time. Back at $1.50 it might have cost less money to drive 5 miles out of your way and 5 miles back - but, in the city that 10 mile round trip could take you 20 minutes or more. Which, at minimum wage is almost two bucks right there. And, your "free gallon" was only worth $1.50... So, you lose money that way, and that's without adding back in the cost of gas for driving that far - once you do that, you've lost more than $2.25 - or more than 1.5 gallons - by trying to "save money".

I said all this to say - stop wasting time, wasting money, wasting gas, and polluting more - by stressing and planning and freaking out about trying to save a few pennies a gallon. It's just not worth it. If you really want to save money, and it's an option - take a bus, walk, ride a bike, or stay home.

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BenSpark said...

Your last line is fine and dandy for someone who can do that. However when your place of business is a 40+mile commute away and there are no buses, trains, bikes, rickshaws or anything else to get you there you are pretty much getting bent over every time you leave the house. Not one of those options that you propose is something that many people can do. Well, in the case of where I live, MASS, if you want to live near where you work it is going to cost you an outrageous sum so people move out further and further from the cities. That means longer commutes, for many people the train is fine if you work in the actual city near a rail line or within a bike or walk of the train. But if you work in one of those cities that is not on a rail line or bus route or is too expensive to live in you have to commute, in your car.

While your overall post was good, and I do like what you write most often the last line pisses me off because those options are just not viable. It is easy to say but not to do in the real world.

Otherwise your post was decent.

Chad said...

I wasn't trying to be a jerk when I said that, I just meant that those things are going to save you a lot more money than driving across town to save 8¢ a gallon on gas.

And I wasn't really thinking about "to work" I meant in general. Obviously, you can't stay home from work to save money. Eventually (if not immediately) you will lose your job, which would cost, well, your whole income.

In cases such as yours, where every other effort has been made to save on using gas - just buy gas where it is most convenient and consistently cheaper. In other words, the cheapest gas station you pass on a regular basis.

I should probably note, for full disclosure purposes, that I work from home and don't own a car. I live in the city, so walking to the grocery store is not out of the question.

I would own a car, if I had more money, and will soon be moving to a cheaper place, and hope to have a car by the end of the year, but I've been carless for about a year now.

whatever said...

Great post! And so true! I can't seem to get my DH to quite understand the thought process behind that ("let's drive out to ::timbuktu:: babe and fill the cars up.") .... I'll watch as eyes bulge and steam pours from his ears when I tell him I took the convience of the corner store and filled up there for just over $4. -evil grin-

I've decided there really is no gas shortage. Any idea what the profits for Exxon were last year? Yep. Wasn't too bad. What's really going on with the increasing gas prices is that Those In Charge (it's an official term) realized that the luxury of travel when we want to isn't something Americans are going to give up any time soon. They keep raising the prices and we keep on buying it anyway, making up a myriad of excuses as to why we MUST.