Desperately Seeking Cheaper Gas

By David L. Brown

The way some people respond to change is to panic, run around like the proverbial chicken, and seek an easy solution to get things back to the way they used to be. It is no different with high gasoline prices, as are now being experienced by American motorists.

This will be a brief post, merely to share with you this current quick poll from FoxNews.com, which asks the question: “Do you drive out of your way to find a gas station with the lowest prices in your area?” Here is a screen shot of the results at the time I viewed it:

foxpoll.jpg

As you can see, nearly 40 percent of responders said they would drive extra miles in search of cheaper gas. I have to wonder if Fox asked this question with a sense of devilment, because the thought of someone driving around in his or her automobile, very likely a gas-guzzling behemoth such as are so popular today, in desperate search for a cheaper gas price is certainly ironic.

My observation is that gasoline prices do not vary by more than a few cents in any given neighborhood, and that means that to make any substantial savings would require driving some distance, not just down the block. So we are not considering a long-haul to El Cheapo Gas out on the Interstate.

What are the economics of this scenario?

Let’s presume that you drive a big SUV, getting 10 mpg city. Let’s presume that the first gas station you see, which by the terms of the question is not “out of your way,” has a posted price of $3.50. Let’s further assume that by driving around the area you could find a pump price five cents cheaper, or $3.45 per gallon. Finally, let’s assume a 15 gallon fill-up. How far can you drive before it will cost more to seek the lower price than you would save?

By saving a nickel a gallon you would pocket a whole 75 cents in savings on the 15 gallon fill-up, or about the cost of a candy bar. At 10 mpg and $3.45/gal. it will cost you 34.5 cents to drive one mile. Divide the 75 cent savings by the 34.5 cent per mile fuel cost and you will see that if you drove more than 2.17 miles in search of the lower priced gas you would actually have spent more than if you had just paid the higher price at the first station you saw.

But that’s not all, because remember that you have driven “out of your way” to find the cheaper gas. That means that you will have to make the return leg back to your regular route. Assuming that it is a straight back and forth path, that means that the 2.17 miles needs to be divided by two, leaving only about a one mile range to break even.

From that we can conclude that you better find the cheaper gas quickly and it better not be far away. What if you end up driving around for ten or fifteen minutes and never do find a better price? My friend, you have just wasted time, thrown away money, and contributed more to our nation’s energy problem

My bet would be that many if not most drivers that follow the random strategy suggested in the Fox poll will end up exceeding the breakeven point and thus end up spending more. There are better ways to deal with uncomfortable gas prices. For instance, use your cell phone and call stations in your area to check out prices, then plan your trip for the most efficient route that takes you to the bargain gas. There are also Internet sites that post current gas prices. You might also consider driving less, car pooling, riding a bike, taking the bus, or even walking. The exercise will do you good and shoe leather costs a lot less than gasoline.

Even better, stay at home and watch that Al Gore movie about climate change, then figure out ways to make a smaller environmental “footprint” on the Earth.

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