### False Savings at the Pump

Last Update: March 22, 2018

With higher gas prices and fewer gasoline stations, motorists must make tougher decisions to avoid being penny wise and miles foolish. How many miles should they travel to save a few pennies per gallon?

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On the reverse side of that question, how price-competitive should a station be to hold on to regular customers and/or win new customers?

Example: For this exercise, round off the nine-tenths price to the next penny. Station "A" is one mile from home and Station "B" is three miles away, meaning a round trip is two miles for Station A and six miles for Station B. Station A has raised its price for regular gasoline to \$4.00 per gallon. Station "B" is offering regular gasoline at \$3.95 per gallon.

### Penny Wise Miles Foolish

Question: Is it worth driving four extra miles (two more to get there and two more to get back) to save that nickel per gallon? Here’s the math, assuming the motorist gets 21 miles per gallon in his local driving and he will need 12 gallons to fill up his sedan:

• Cost of 12 gallons at Station A: 12 times \$4.00 = \$48.00
• Cost of 12 gallons at Station B: 12 times \$3.95 = \$47.40
• Saving at Station B = \$.60

Cost of driving to and from Station A:

• Distance: Two miles
• Gas consumption: 2 miles divided by 21 mph = 9.5% of one gallon
• Gas cost: 9.5 percent x \$4.00 = 38 cents
• 38 cents + \$48.00 = \$48.38

Cost of driving to and from Station B:

• Distance: Six miles
• Gas consumption: 6 miles divided by 21 mph = 28.6% of one gallon
• Gas cost: 28.6 percent x \$3.95 = \$1.13
• \$1.13 + \$47.40 = \$48.53

In other words, it will cost 15 cents more, plus normal wear and tear on the automobile, to buy the gasoline at Station B. And that doesn’t count the value of the motorist’s time. The wear and tear would not be noticeable,but it is there, even if minutely.

### Breaking Even on the Mileage

So when is it worth driving a few extra miles to save on gasline? In the above example, the motorist would just about break even if the cost of gasoline at Station B is only \$3.94, instead of \$3.95. The new numbers would be 12 x \$3.94= \$47.28 + \$1.13 = \$48.41, compared to \$48.38 at Station A.

For most motorists, the three-cent saving would not be worth the wear and tear on the auto and the motorist’s time.

The decision gets a bit tougher when Station B offers its regular gas 10 cents cheaper. The math at \$3.90 is 12 x \$3.90 = \$46.80 + \$1.13 = \$47.93. That’s a 45-cent saving compared to \$48.38 at Station A.

### Number of Stations Declining

Other factors, such as rush hour traffic, neighborhood security, station loyalty, miles per gallon, etc., can impact the saving formulas. Then there is the matter of principle: Whether to patronize a station or gasoline company that chooses to charge higher prices.

One positive way to save money is to purchase the gasoline enroute to other locations, even if the tank is only half empty. This will avoid driving extra miles just to buy gas.

The U.S. Census Bureau says the number of gasoline stations in the United States declined from 126,889 in 1997 to 121,446 in 2017 and that number is believed to have declined even more in recent years. Stations say they make smaller profits when gas prices are high, so motorists may have to drive longer distances in the future to purchase gasoline, making the planning of those purchases even more important.

Assuming gas at \$4 per gallon and a vehicle's performance at 20 miles per gallon, motorists can estimate that gasoline will cost about 20 cents per mile.

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