Smart SpendingSmart Spending

How cheaper gas can cost you more

It's one of the grand illusions in life that the pursuit of less expensive gasoline will save you money.

By MSN Money Partner Mar 18, 2011 10:46AM

This guest post comes from Len Penzo at Len Penzo dot Com.


You know, some guy named Ripley once showed me that things aren't always what they seem. For example, a banana tree is not a really a tree at all, but a massive herb that can grow as tall as a four-story building.


If you think that's something, koala bears aren't really bears -- they're marsupials.

And next time you visit New York City, keep in mind that an egg cream contains neither eggs nor cream, but simply chocolate-flavored syrup mixed with soda water and milk.


Lead pencils and the drive for the cheapest gasoline prices

I bet you didn't know that things aren't always what they seem when it comes to buying gasoline either. Post continues after video.

With the high price of gas back in the news, it seems like more and more people are suddenly doing their best to try to minimize the impacts to their pocketbooks. For example, here in California prices are now over $4 per gallon in many locations.

Yesterday the Honeybee came home from shopping at Costco and informed me that there were so many cars lined up to get the low-priced gasoline there that the queue stretched around two street corners. There were so many cars in line -- including a neighbor of ours -- that she conservatively estimated people were patiently waiting at least 20 minutes to get to the busy pumps.


Obviously, the discount being offered by Costco was big enough to entice people to wait that long to fill up their tanks.


On that particular day, the price for regular gasoline at our local station barely a mile down the road was $3.91.


Care to guess how much the folks in line at Costco were paying? Three dollars and seventy-nine cents. Yep. A whole 12 cents per gallon less.

Is waiting in line for 20 minutes truly worth the hassle of saving a measly 12 cents per gallon? If you ask me, it's pure lunacy. After all, for a 10-gallon fill-up, that's a very modest savings of $1.20. Heck, for $2.40, even a 20-gallon fill-up isn't that impressive.


Then again, the reality is, just as a lead pencil contains no lead, the frugal fuel shoppers who waited in that long line at Costco to save 12 cents per gallon probably didn't save any money at all.


Penny wise, pound foolish

A shooting star is not a star -- it's a meteoroid -- and more often than not shopping for low gas prices isn't a smart idea. This is especially true if you have to drive more than a short block or two out of your way to take advantage of a lower price. That's because the savings at the pump are almost always eaten up driving around to get the bargain.


Then there is the seemingly niggling issue of idling cars. When it comes to fuel consumption, the California Energy Commission notes that two minutes of idling is equivalent to driving one mile. So a car idling for 20 minutes ends up burning the same amount of fuel required to drive 10 miles.


With all that in mind, let's examine just how much money my frugal neighbor really saved.

It turns out that Costco is a 12-mile round trip from our houses. Since our local gas station is but a two-mile round trip, my neighbor had to drive an extra 10 miles out of his way. Add to that the extra fuel he burned by keeping his vehicle idling in line for 20 minutes, he used enough fuel to drive 20 more miles than if he would have simply paid $3.91 at the corner gas station.


Now, if I assume the average fuel mileage of my neighbor's car is 20 miles per gallon, he burned an extra gallon of gasoline -- not to mention at least a half-hour of his life -- just so he could save 12 cents per gallon.

Based on my very reasonable assumptions, you can see that, at best, my neighbor spent $3.79 to save roughly $2.40. In other words, he would have been much better off financially ($1.39 to be exact) buying the more expensive gas.


The truth is, an English horn is actually an oboe that originated in Poland, and folks who strive to save a nickel or three for a gallon of gas usually end up paying more money than those who don't try at all.


Believe it, or not.


More from Len Penzo dot Com and MSN Money:

Well its called psychological pricing.  Appears to make you think you are saving but really you aren't.  However why the heck would you choose to pay the higher price just because you don't have the patience to reward the gas station with the cheaper gas price?  Its called the free market and how it is influenced by lower prices driving competition.  If we stop shopping for the cheaper price for pretty much the exact same product, then we only incourage inflation and stagflation.  Don't be publishing crap like this because you are too short sighted to see the value and purpose of rewarding the cheaper price with your business transaction.
Mar 21, 2011 10:17AM

Was your neighbor shopping at Costco to begin with, if so the 10 extra miles shouldn't be included since he was already going there,

Apr 7, 2011 1:23PM

The article also assumes both are the same gas. 10% ethanol gives you worse mileage than straight gasoline. In my case my mileage drops 20% on ethanol so for the 10 cent savings for the ethanol I actually burn more fuel than I would if I filled with straight gasoline so it ends up costing me more to go the same distance. If you are able to you should check your mileage comparrison for yourself. Ethanol is supposed to be cleaner but for me after you subtract out the 10% ethanol that was added I ended up burning more petroleum then if I would not have purchased the 10% mix in the first place. So much for putting what could have been used to feed people into my gas tank.

Apr 7, 2011 1:57PM
To: Fed Up Liberal Media, I get where your are coming from with the "free market" advice.  However, I would say that it is all of the cheap crap from China and other low-wage countries that have helped to eliminate a lot of jobs here in the U.S.  I always look for "Made in the USA" whenever I'm shopping, and it's very rare that I find anything other than some clothing.  I, for one, am more concerned with quality than the cheapest price.  

Since gasoline is pretty much the same no matter where it comes from, and since most crude oil is imported (of necessity) then it does make sense to shop for price for gasoline.  Still it does not make sense to drive a great distance to save a few cents.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.