Finding the Cheapest Gas

With the price of gas changing day by day. It’s always a good idea to make sure that your getting the best price possible.  With today’s smart phones it’s much easier with great apps like Gas Buddy that list the gas prices as submitted by users.

There are a lot of different variables that have to be considered when choosing a gas station when you want to save.

Things to consider:

• Does it charge more to use your credit card or debit card?  If so, is the extra charge
• • By the gallon
  • By the transaction
• What is the price per gallon
• How many miles away is it from your location
• If using a credit card does it offer cash back on gas? Of course this only works to your benefit if you pay off your credit card in full at the end of each billing cycle,
• Are there reward options?  Often supermarkets that also have gas stations such as Safeway offer discounts when you have spent X amount of dollars at their stores.

Calculating the final cost per gallon:To calculate if it’s cheaper to go across town to save that five cents per gallon, you need to grab a few numbers along with a calculator.

The numbers to grab

• How many gallons of gas do you need? (G)
• What is the gas mileage of your car? (MPG)
• What is the cost per gallon of the closer (more expensive) gas? (Cc)
• What is the cost per gallon of the further (cheaper) gas? (Cf)
• How many miles out of the way is the cheaper gas? (M)

The  Calculations

Total Cost of Closer (more expensive) Gas (TCc) is essentially the total number of gallons you need, multiplied by the cost per gallon of the closer gas:

TCc = (G * Cc)

Total Cost of Further (cheaper) Gas (TCf) is determined by the total number of gallons you need, multiplied by the cost per gallon of the further gas, PLUS the number of gallons you will burn while driving to the further station, multiplied by the price per gallon of the gas already in your car.

TCf = (G * Cf) + ((M/MPG) * Cc)

(For this equation, it is assumed that the gas already in your car is from the closer, more expensive station. Even if this is not the case, it is the most conservative way to go… because if it’s cheaper to drive across town to fill up even when burning expensive gas, it’s certainly going to be cheaper to drive across town to fill up if you are burning less expensive gas.)

A quick look at the difference between these two totals will let you know whether it’s worth it to make the drive for the cheaper gas.

Cost Savings = TCc – TCf
or
Cost Savings = (G * Cc) – ((G * Cf) + ((M/MPG) * Cc))

Take a look at this real-life situation:

• Gallons of gas needed (G): 18
• Gas mileage of the car (MPG): 20
• Cost per gallon of the closer (more expensive) gas (Cc): $3.049
• Cost per gallon of the further (cheaper) gas (Cf): $3.000
• Miles out of the way for the cheaper gas (M): 4.0

Once again, our cost savings is:

CS = (G * Cc) – ((G * Cf) + ((M/MPG) * Cc))With the numbers above we get:

CS = (18g * $3.049/g) – ((18g * $3.000/g) + ((4.0m/20mpg) * $3.049/g))
CS = $54.882 – (($54.000 + (.20g * $3.049/g))
CS = $54.882 – ($54.000 + $0.610)
CS = $0.27So, in this situation, driving the four miles out of our way to the other station saved a total of about 27 cents. Not a huge savings, is it?  Then you have to consider that the savings may be even less if the drive to the other station is through city traffic and your stopping at every block and suddenly getting much less than its average 20 miles per gallon.

We can dig deeper into the numbers with different scenarios however we think you get the idea.