Should You Spend Time To Shop For Gas? Or, Learn The Rule Of Thumb

Is It Cheaper To Shop For Gas?

You have your ‘gas price’ app on your phone, and you spot a deal a few miles away.

Depending on how much you are Worth, Cost of Gas, and your Tank Size, will decide if that is a deal.


Warning- This article has a bunch of Fun Math. Easy multiplication and addition. If you want to skip the math and learn The Rule Of Thumb, skip to the end.

Money Savings

Download the excel sheet and change the givens to see your data extra personalized.

Table of ‘givens’

Gallons To Fill * Gas Station Price Difference = Total Profit

Total Profit is the actual dollars you would be holding.

Time Value

Using Miles Traveled and Average Miles Per Hour, we can calculate the extra time it takes to get gas.

If you value your time at 10$/hr you get $ Lost In Time.

Life Profit

Life Profit = Total Profit$ – $ Lost In Time.

Life Profit is a conversion of your Time Value ($/hr) into dollars. I’m not certain this the most significant value in this study. I personally find the Total Profit and Lifetime Vacation Days Lost

Vacation Days is the lifetime cost if you did this weekly, in units of 8 hours(A vacation day). Skip this to save 26 vacation days worth of time in your lifetime.

Takeaways, savings are pretty minimal, a 100$ dollars a year if you are lucky. At a very lucky extreme you are saving $10,000 in your lifetime. I personally think its too much effort.

Anything beyond 1 mile away is almost always a waste of a minimum wage worker’s time.

Real Life Useful Probability

Should wait until the next gas station on your way home to get gas?

You don’t know future prices, and after you pass a gas station, you cannot turn around. Previous are Eliminated.

This is a common mathematical problem, and Numberphile did a great video on selecting ‘The Best Toilet At A Music Festival’ or “The Secretary Problem”.

How To Pick The Best Gas Station

  1. Observe 37% of the possible gas stations (IE 10 gas stations, observe 4)
  2. The lowest price is your price to beat
  3. When you find a better price than what you observed, buy it immediately
  4. If you cannot beat the lowest price observed, buy gas at the final location

I love that probability can be used in real life. This is literally no extra effort, this is optimization of the current process with math.

Anyone have other Real Life Applications of The Secretary Problem? Would you use this to pick a line at the grocery store?

Update/Fun Stuffs

I need to name a Unit. Only in 4th grade did I imagine this day 😛

1/(second * dollar). or Per second dollar. Studying Life and adding Time dimensions will allow Quality metrics to be more comparable.

I really don’t want to name it Kirk, but naming after famous people/things may cause confusion. Do you have any cool sounds/acronyms/ideas for a New Unit name?? If you don’t comment, I’m going to name it Kirk.

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3 thoughts on “Should You Spend Time To Shop For Gas? Or, Learn The Rule Of Thumb

  • June 14, 2017 at 3:12 pm
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    As much as I would like to just name that unit a Matt I think the best term for it would be a value frequency. Time for a twitter poll?

    What are the odds of failing to find a cheaper gas station after viewing the first 37%? I think there might be some risk tolerance difference between Michigan and Nevada. Here we won’t see another gas station for 80 miles. Of course we would turn around and drive to the cheapest gas station first, but that takes the fun out of the probability problem.

    Reply
  • July 27, 2017 at 1:50 am
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    I was confused by this article. Why would you need to drive to multiple gas stations to observe the respective prices? Gasbuddy has existed for years and it gives you a pretty good idea of the prices, even if some of the prices haven’t been updated by other users today.

    Reply
    • July 27, 2017 at 4:04 pm
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      I am aware of GasBuddy. It’s an extra step or you are using your cellphone while driving.

      This is a 0 impact way to optimize gas. Passively observing gas stations takes no extra time.

      Reply

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