Do You Really Save Money When Gas Prices Drop?

I’ve noticed that a lot of gas prices have been fluctuating left and right. Usually, the reason for this is because of the price of crude oil. What I find very frustrating is the attitude people have towards gas prices. Maybe after reading this post, you will too. We live in a nation where everybody wants the cheapest gas price, but at what real cost? Sometimes, we get a little too distracted by the fact that the prices are so low we don’t notice the difference in quality.

The Attitude

I mentioned that I get frustrated by the attitude people have towards gas prices. What I mean by this can be explained by an example.

A man pulls up to a gas station and notices that the price of premium gas is always around 20¢ higher than regular. He drives a Mustang and fills up at the quarter tank mark. Since he’s got a 16 gallon tank, he needs 12 gallons of gas. He knows that his car owner’s manual says that he should use premium gas to keep the car running clean and the way it should. But he can’t refuse the offer of 20¢ less per gallon.

Did this man really save a lot of money? The difference in the price of premium gas was 20¢. Multiplied by 12 gallons of gas, his savings was a whopping $2.40. It’s just like when people tell me that they’d love to reap the benefits of premium gas, which really only burns hotter and cleans a little bit more, but they can’t afford it. If a $2 increase in your gas budget is going to break the bank, you might not want to be driving. Then again, most people don’t understand this and the attitude is thus one of the subconscious.

So What About Diesel?

I’ve been asked about diesel before in regards to whether or not it’s cheaper in the long run. I’ve wondered the same thing myself for a while and it’s about time we found out. As I’m sure you’re already aware, diesel is not cheaper than normal gas. It’s about 22¢ more expensive than regular gas at the local Chevron. Let’s compare the 2014 Volkswagen Jetta non-diesel and diesel models. According to FuelEconomy.gov, the diesel model takes nearly one less gallon to travel 100 miles. You also save $2,750 in fuel costs over five years compared to the $750 you would save with the regular gas model. Let’s see if the government is right about the cost differences using local data.

At the local Sinclair in Rexburg, regular gas costs $3.59 per gallon and diesel costs $3.80 per gallon. The 2014 Volkswagen Jetta has a 14.5 gallon tank. So far, it costs $52.06 to fill up with regular and $55.10 to fill up with diesel. The combined city/highway mpg for the regular gas model is 27 MPG and the diesel model is 34 MPG. In the regular gas model, we can travel up to 391.5 miles and in the diesel model we can travel up to 493 miles. But let’s be realistic, road trips are the real reason we want good gas mileage. The city MPG for the regular gas model is 24 MPG and the diesel model is 30 MPG. The highway MPG for the regular gas model is 32 and the diesel model is 42 MPG. Now, let’s look at the summary of this boring stuff.

The diesel model costs only $3.04 more to completely fill up the tank than the regular model does. For an extra $3.04, you get to drive an extra 102.5 miles. If you’re just driving to work, you can drive an extra six miles per gallon, or 87 miles per tank in the diesel model. But the road trips are more important, right? You can drive an extra 10 miles per gallon, or 140 miles per tank in the diesel model.

And the Winner Is…..

If it’s not obvious enough, it’s much cheaper to drive a diesel Jetta than it is to pay for regular gas. Of course, there are price differences. The 2015 Volkswagen Jetta is starting out at $16,895 for the regular gas model. The diesel model starts at $21,296. Of course, we’re talking very basic and least expensive models. But still, a $4,400 difference isn’t bad at all. It’s actually a great investment when you consider the difference and value in prices from above. Let’s not forget that diesel may fluctuate in price, but it’s so uncommon for people to use a diesel fueled car that they actually stay fairly constant.

Recap: The reason why diesel won is because for an extra $3.04, you can do travel so much farther than you could with the other car. This means that you might fill up less often. Either way, the value is there. If you completely fill up twice per month, the cost is an added $72.96 per year. If you drive a lot and fill up three times per month, your added cost is $109.44 per year. Either way, the value is obvious and now everybody has this wonderful knowledge.

Bonus: College Student’s Analysis

Let’s do a more personal and realistic analysis. You can do the same thing if you follow along. Grab a pen and a piece of paper. I’m going to use the diesel model for my analysis.

Since my wife and I drive from Rexburg to Eugene whenever we go home, we drive 753 miles (I put in the addresses after I created the link). This means 12 hours and 10 minutes of driving, if we follow the speed limits and don’t stop for food or anything. Let’s assume that we’re driving in the summer to avoid adverse weather effects. No rain, no anything. Just clear, beautiful weather. We’ve established that we can drive up to 493 miles combined city/highway. Based on just highway numbers, we can drive up to 609 miles per tank. The places my wife and I fill up at is usually before we leave Rexburg, then in Boise, Ontario (for safety), Burns, Bend, and when we arrive in Eugene. Let’s take a good look at an estimate for each of these gas stations. I’ll include the math for those who are following along with pen and paper.

  • Rexburg Sinclair: 0 miles traveled; 10 gallon fill; $3.80 per gallon x 10 gallons = $38
  • Boise Chevron: 312 miles traveled; 300 miles/609 miles = 49.26% x 14.5 gallons = 7.14 gallons x $3.89 per gallon = $27.78
  • Ontario Love’s: 61.8 miles traveled; 61.8/609 = 10.14% x 14.5 gallons = 1.47 gallons x $3.68 per gallon = $5.41
  • Burns Shell: 131 miles traveled; 131/609 = 21.51% x 14.5 gallons = 3.12 gallons x $3.89 per gallon = $12.13
  • Bend Chevron: 128 miles traveled; 128/609 = 21.02% x 14.5 gallons = 3.05 gallons x $3.95 per gallon = $12.04
  • Eugene Shell: 133 miles traveled; 133/609 = 21.84% x 14.5 gallons = 3.17 gallons x $3.87 per gallon = $12.25
  • Total Miles Traveled: 765.8 miles; Total Gallons Purchased: 27.95 gallons; Total Fuel Cost: $107.61; Average Price: $3.85 per gallon

That’s what I’d normally do if I was filling up with regular gas in my current car. As we can see, it’s very unnecessary to stop so often. So let’s take another look at what this would look like if I didn’t stop so much. Would I save more money by not filling up as often?

  • Rexburg Sinclair: 0 miles traveled; 10 gallon fill; $3.80 per gallon x 10 gallons = $38
  • Ontario Love’s: 373.8 miles traveled; 373.8/609 = 61.38% x 14.5 gallons = 8.9 gallons x $3.68 per gallon = $32.75
  • Bend Chevron: 259 miles traveled; 259/609 = 42.53% x 14.5 gallons = 6.17 gallons x $3.95 per gallon = $24.36
  • Eugene Shell: 133 miles traveled; 133/609 = 21.84% x 14.5 gallons = 3.17 gallons x $3.87 per gallon = $12.25
  • Total Miles Traveled: 765.8 miles; Total Gallons Purchased: 28.24; Total Fuel Cost: $107.36; Average Price: $3.83 per gallon

I ended up estimating that more gas would need to be purchased. Also, note that the total fuel cost and average price is only pennies less than before. What’s left to do is to actually try it out sometime. But that won’t happen for quite a while.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s