JuMex: Is it worth it to drive to a cheaper gas station that's farther?

This post will probably be the most useful of the JuMex topics ever. Don't worry, next time I promise that JuMex will return to being totally useless.

Thanks to Excel, I can quickly do some calculations on when it is a good deal to go to a farther gas station. The equation at the core is simple (money saved at station) - (money spent to drive there). This chart is calculated at the current gas price of $4.00. For example if you buy ten gallons of gas at a station that is 10 cents cheaper than another station, you have saved 10*0.10 = 1 dollar. And if your car's gas mileage is 25 mpg, and the gas station is 3 miles farther (6 miles round trip), then the cost of you driving to that station is 4/25*6= .96 dollars. That means you save 1.00 - 0.96 = 4 cents. Hardly worth your time. Of course when you fill up a big SUV (20 gallons) you save more and so it makes driving farther worth it. A bigger gas price differential (20 cents instead of 10 cents) also makes driving farther ok. A car with better mileage (like say a Prius at 40 mpg) also makes driving farther worth it. The total opposite makes you lose the most money. It's not worth driving a SUV to a station 5 miles away that's only ten cents cheaper to only fill up ten gallons. You will lose 1 dollar and 67 cents.

As I said before, this chart is based on $4.00 gas. As the cost of gas drops down, you are able to drive to a farther station and still break even. The reason is that gas stations keep an absolute price difference, not a relative percentage difference. When a certain Arco is 4.00, a certain Chevron is 4.20. When that Arco is 2.50, that Chevron is 2.70. The difference is still always 20 cents. Which means as gas prices drop, you save more money at the cheaper station because the percentage saved is larger. The opposite is also true, as gas prices rise, a 10 cent differential means nothing to the total cost of your car's tank. To give you an example, if gas at Costco cost $75.10 and gas at Chevron cost $75.25, would anyone bother to save a measly 2 dollars when a full tank costs 1125 dollars? Hell NO.

Useful website: www.gasbuddy.com

1 comment:

J.Frosty said...

that's why i just stick to filling up at costco. It's close and always noticeably cheaper than the rest, even if it is "watered down" gasoline...

or is it because my dad pays for my gas at costco... =X