Go The Extra Mile?

There was a useful analysis on the news a few days ago. It was about the economy of driving farther to pay less for gas. Unfortunately I didn't see it, but I bet I can recreate it with some simple analysis.

Divide the gas prices in your area ($2.899/gallon) by the fuel economy of your car (29 mpg). This gives you the fuel cost to drive your car a mile. For my car this is about 10 cents. Now the actual operation cost per mile is higher than this because you have to account for repairs, oil changes, etc. But that stuff varies by car and driver temperament, so for me 10 cents/mile is an ok estimate.

Now divide this by the number of gallons in a typical fill up. For me that's between 10 and 12 gallons. This gives you the amount you need to save to drive that extra mile to the next gas station. For me I need to save about 1 cent/gallon/mile of extra driving. So if I drive 5 miles to save 2 cents/gallon, I'm coming out on the short end of the stick.

Chances are you will get around a penny per gallon per mile as well. Larger cars may have lower fuel economy and cost more per mile, but will have larger gas tanks so that you save more when you do fill up.

Now this is a very basic analysis so keep the following things in mind:

• Gas prices fluctuate and so does your cars gas mileage. This is at best a rule of thumb.
• The 1 cent/gallon/mile is actually a minimum estimate based on fuel costs. It could be 2 for some people when you factor in other operation costs as well.
• That 1 cent only applies if you are just driving to get gas. Getting gas is the only thing you are doing for that leg of the trip. If you are driving for other reasons don't worry about it the 1 cent. If you pass a lot of gas stations going to work, stop at the cheapest one not the first one. You were going to drive by them all anyway. I like to get gas at BJs in Newcastle which is a hike from my place. But I only get gas there coming home from the gun range or when doing other shopping in Newcastle. I'm not making a special trip so there is no sense in trying to calculate it.
• None of this takes into account that you may not know if the next station will be cheaper. That is an expected value problem and is a lot harder.

If you want to get the cheapest gas on the way home, planning is good. I hate passing a gas station up only to realize that they had a good deal after I get to the next one. For gas prices in your area, try MSN's local gas price site. All you need is a zip code and it will hook you up with the best, worst, and everything in between.