Should You Spend Time To Shop For Gas? Or, Learn The Rule Of Thumb
Efficiency- Michael: 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
- Observe 37% of the possible gas stations (IE 10 gas stations, observe 4)
- The lowest price is your price to beat
- When you find a better price than what you observed, buy it immediately
- If you cannot beat the lowest price observed, buy gas at the final location
Probability can be used in real life. Optimization with math, and easy to use.