Cheap Gas - learn how to buy it

Cheap gas is obtainable if you know how and when to buy it. Fuel prices can be a stumbling block in our attempts to practice frugal living. Using less fuel and learning how to buy it for less will certainly help.

The relative difficulty or cost of these tips is rated 1 to 10. A rating of 10 suggests that a tip is the most difficult or most costly. Expected savings are also rated 1 to 10. A rating of 10 suggests that a tip will provide substantial savings in fuel, money or both.

Here are some suggestions to cut your fuel costs all year long.

Buy cheap gas. Find a station with cheap gas and patronize that business. This won’t save much money, but saving some is better than saving none.

If using the miles per dollar idea below, you find that buying a different grade of fuel doesn’t make a difference in fuel economy for your car, then buy the least expensive grade that your car is designed to run on. And, find a station that sells for less.

In order to be worth your while, you must have a significant difference in gas prices. I suggest that it isn’t worthwhile getting lower priced gas unless it is very convenient for you, or you can find it for 10 cents less per gallon. Good luck with that.

Example: Let’s say you have a 12 gallon tank and it needs 10 gallons of fuel. If you find cheap gas at 5 cents less per gallon, then you save money on gas to the tune of 50 cents. So how much fuel can 50 cents buy? It buys about 19 ounces of fuel at $3.41 a gallon (spring 2008 prices). That’s another 4 miles for a car that gets 28 miles per gallon. How far are you going to drive to get that 19 ounces of fuel?

You get it. Unless the cost differential is great (relative to the cost per gallon), the motivation is just not there to buy cheap gas at another station. The higher the gas prices, the more difference in cost per gallon there has to be before you can really call it cheap gas. It has to be worthwhile to go get that lower priced gas. Otherwise, you are simply consuming your savings by driving elsewhere to get it.

Back when I was a kid we had gas wars, and gas prices were 19 to 21 cents a gallon. Almost everyone’s tank held 20 to 24 gallons. At 3 cents difference, you only had to buy 6 gallons to get another gallon “free”. A fill-up meant that you could get three gallons “free” if the price difference was 3 cents.

Now, with most tanks holding 12 to 15 gallons, and a 3 cent price difference hard to find, you would have to buy over 110 gallons of fuel (at spring 2008 prices) before you would get even one “free” gallon.

The only time it is worthwhile buying gas somewhere else is if a station is gouging you on the price. Then, the time to buy gas somewhere else is every day from that day forward.

Cost or difficulty: 1
Savings: 1

Cheap gas is really a matter of miles per dollar. John Silveira, senior editor of Backwoods Home Magazine has an idea how to save money on gas – make certain you are getting more miles per dollar. He has done experiments using regular, mid-grade and premium gasoline. Results suggest that his car gets better fuel economy using, not cheap gas, but more expensive (and higher octane) fuel. This won’t work for every car, but it does for his.

Note: Use at least the octane rating recommended for your car. You might void your warranty if you use a lower octane fuel. Check your owners manual for the minimum recommended octane.

If you want to try this yourself, you should buy a few tanks of one grade and carefully keep track of the miles driven and cost of the fuel. Then buy a few tanks of another grade and carefully keep track of the miles driven and cost of the fuel.

The idea is to identify the number of miles that a few tanks of fuel will provide, and then identify how much was spent on that fuel. If you divide the miles by the cost of fuel, this gives you miles per dollar. Using the grade that gives you the highest number of miles per dollar will be your cheap gas, even if it costs more per gallon.

For example, if 30 gallons of a fuel type provides you with 900 miles of travel, then at $3 per gallon, the cost is $90 for 900 miles, or 10 cents a mile. If 33 gallons of another grade of fuel provides you with 1122 miles of travel, then at $3.10 per gallon, the cost is $102.3 for 1122 miles, or 9 cents a mile. You can see in this example that the higher cost fuel is actually cheap gas because it costs less per mile (or more miles per dollar).

The idea is to save money on gas by understanding which fuel gives you the best performance in terms of distance traveled for the dollar. Gas prices for different grades vary by 10 cents per gallon. Running this experiment answers the question: “Is paying that extra 10 cents really buying me anything in terms of increased distance traveled?”

In order to do this with some level of accuracy, you have to keep good track of your mileage and gas consumed. You also have to use three or four tanks of fuel from each grade so you get a good “time average” picture. Only then will you be able to determine whether this approach will help you identify cheap gas so you can save money on gas.

Also, if you use the same gas pump and filling technique, it will likely give you more accurate results. To find out how much fuel was used out of each tank, just pump the gas in slowly and let the pump automatically shut off. Stop there and record the cost of fuel. This will be how much it cost you to travel the distance represented by subtracting the odometer reading associated with the last fill up from the odometer reading associated with the current fill up.

I haven’t tried this approach to identifying cheap gas, but it is certainly worthwhile if you travel tens of thousands of miles each year.

Cost or difficulty: 1
Savings: 1

Buying cheap gas and using the fuel grade that gets you the most miles per dollar should be part of your plan for frugal living. The cost of fuel can be quite influential for many activities, so implement what you reasonably can to support frugal living in the face of roller coaster gas prices.

Done with Cheap Gas, take me back to Save Gas

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I'm a big proponent of being debt-free, and I mean entirely debt-free - no mortgage payment. It's not essential for financial freedom, but you'll love the feeling once you get there. If you didn't have a rent or mortgage payment, how much more could you do for yourself with your current level of income? I suspect plenty.

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