Stop Driving Further to a Cheaper Gas Station

Gas is expensive, and it has been for the last six months or so.  Because of this, I've heard several people talk about driving out of their way to pay less for gas.  If you're doing this, you're probably not saving money.  In my experience, gas prices don't vary all that much.  The biggest swings I see in a city are typically 5 cents/gallon, maybe a bit more.  So is it worth driving an extra couple of miles to get to that cheap gas station?  Probably not.

Here's why.  I'll use numbers for average American cars.  Let's say you're filling up your tank with 13 gallons of gas, and your car gets 20 mpg in the city, and the gas price at the nearest station is $3.65/gallon.  But you know of a station where you can get gas at $3.60/gallon just one mile away.

1.  First of all, 5¢/gallon × 13 gallons = 65¢ is what you stand to gain if you didn't have to drive any further for that gas.  That's not all that much, compared to the nearly fifty bucks you're about to drop.

2.  But what if you have to drive an extra mile to get the cheaper gas?  Well, at 20 mpg (in city driving), you burn an extra 1/20th of a gallon just getting to the new station.  That extra gas costs you $3.60×(1/20) = 18¢.  Now your savings is only 47¢.  

3.  This gas station was out of your way.  So now you've got to get back to where you were before.  That wastes another 18¢ worth of fuel, and you're down to just 29¢ in savings.  

Put simply, your percentage increase in gas consumption is similar to your percentage decrease in gas price.  So you're not saving much.

Congratulations, you've now gone out of your way to save a quarter, which begs the question- How much is your time worth?  At 25 mph average speed, the round trip two miles takes about 5 mins, assuming you don't catch a bunch of lights.  Optimistically, you spent 5 minutes to save 29¢.  That's $3.48/hour, or about half of the federal minimum wage ($7.25/hour).  

And I've said nothing of the additional mileage put on your car and additional smog and CO2 put into the air.  

Long story short, it's got to be a big difference in price, and the cheaper gas station can't be far out of your way.  Next time, save some time and just pay the extra quarter.