I live in what I like to call an urbanized suburb: we still have parks and lots of houses, but along the main strip of the town there are a number of pharmacies, pizza joints, and a saturation of gas stations. There are two that I can walk to without breaking a sweat.
As a father of two with a brand new mortgage, one of the ways I try to cut down on expenses is to find the cheapest gallon of gas around. There's a web site that makes this an incredibly easy process, but it does not take into account things like savings card or other promotions. Our local grocery store offers $0.10 per gallon of gas for every $50 spent at their locations (and that goes to $0.20 for purchasing $50 in gift cards). Sunoco has a deal in some of their stores where buying a specific item can give you so many pennies off (and they can add up over time).
The supermarket promotion is the best, by far, but they are also the farthest away. The closest one is about 10 miles from home. Usually I can make up some other excuse to drive down there, and fill up on the way back, but other times I go there just for gas, and I always have the same thought going through my head:
"Am I LOSING money by driving all the way out here to try to SAVE money?"
Until now I've been blissfully ignorant of the answer. I'd rather pretend that I'm saving money instead of knowing that I'm not. But, this is another case of Math In Real Life, so it's time to bite the bullet.
There are a few things we need to know:
1. How much gas does my car use? This is traditionally measured in miles per gallon, or mpg.
2. How big is my gas tank? This is in gallons.
3. How much does the gas cost nearby and how much is it further away? These would both be in dollars per gallon ($/gal).
4. How far away is the "cheap" gas? This would be in miles.
So in my scenario, my car uses about 14 mpg in "city" driving. When you buy a car you usually see both city and highway mpg estimates: stopping and starting your car frequently obviously consumes more gas, and lowers your mpg. My gas tank is 19 gallons, which is a gigantic tank for a sedan...both a blessing and a curse.
The gas station up the road is charging $3.349/gallon. Yes, there's a hundredth's place (that's that little "9/10" you see on most gas station signs). I don't know how the gas industry gets away with the deception. I don't see Wendy's offering up a "$0.999" menu. Anyway, the discounted gas is going for $3.299/gallon. I get $0.20 off for spending $100 at the grocery.
Finally, the "cheap" gas is 10 miles away.
So, first thing's first: how much would it cost to fill up my tank at the nearby station? Assuming that the tank is bone dry (this has happened to me before), we're just doing simple multiplication:
19 gallons x $3.499/gallon = $66.50
Yowza. I'm old enough to remember when gas was under $1.00/gallon. Then again, I'm old enough to remember when leaded gas was available. Times have changed.
Next, let's do the same calculation on the cheap gas station:
19 gallons x $3.299/gallon = $62.68
That's already disappointing. Spending $100 at the grocery store saves me a whopping $3.82 at the pump. I already have some idea where this is headed.
Finally, how much did it cost me, in gas, to drive the 10 miles? More multiplication, but we're doing it two ways: using the "cheap" gas price and using the "nearby" gas price:
Cheap: $3.299/gallon / 14 mpg = $0.236/mile x 10 miles = $2.36
Nearby: $3.49/gallon / 14 mpg = $0.249/mile x 10 miles = $2.49
Wonderful. So I save $3.82 by driving the 10 miles to the cheap gas station, but it costs me at least $2.36 in gas to get there (or more, depending on where I last filled up).
Net savings: $1.33 - $1.46
I guess I'm a little glad that there were SOME savings, but obviously far less than I had expected. From now on I will let my discounts accrue until they're something meaningful, like $1.00/gal off or more, and gladly spend the extra $1.00 and change at the local station.
For more information on frugal living I've found a great blog with more tips and hints than math could ever teach you.
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