So gasoline prices are stochastic, and my fill up times sample that signal at random intervals. While I can’t go farther than a full tank of gas between fill ups, I could, for example, fill up now that it’s cheap even though I have a half a tank left, or get 5 bucks of expensive gas to last me until I can get a tank full of cheaper gas (or just limit my driving until then). My goal is to minimize my gasoline expenses by picking optimum times to fill up. Is there any strategy here that is better than others?
Is there any sense in avoiding the pump right after gas prices rise, or filling up even when I don’t need to if gas prices drop?
I believe it’s the same as the stock market. Past results do not predict future performance. You can’t time it.
I don’t think the Efficient Market Hypothesis holds all the time, but it seems like it would apply here… if there really was a systemic edge possible than massive companies would be employing it. I understand Southwest gambled correctly on future prices which helped them get through the post 9/11 era, but other than that?
You could time it pretty well if you had the ability to store large amounts for long periods of time. There are times of year when gas is cheaper, and times when it is more expensive. It’s usually cheapest around November/December.
But for filling your tank up, it’s very hard to predict the short run changes. Gas prices have been slowly declining for the past couple of months, so anyone during that time who thought, “I should get gas now, while it’s cheap” would have seen the price drop even further the following week. By the same token, though, i wouldn’t hold of on buying gas and waiting for it to go down further, because next week it could spike back up again.
Here’s a graph of the average US gas price over the past four years.
My strategy is based strictly on a local phenomena. Gas prices jump up quickly and then usually slide down little by little. The trick is, of course catching it on the bottom.
Without some kind of future vision that can be impossible.
But if your lucky you can take advantages of suppliers who lag the jump.
There is one gas station close to my home that for some reason does not raise its prices until 10am when all others seem to raise theirs at midnight.
So in the morning, if I see a price increase at two stations that I pass before I get to the lagging station, I pull into the lagging station and fill up. That fill up is pretty much the lowest priced gas in my area over the last 7 days and most likely the lowest for the next 7 days. I commute about 50 miles total per day so taking advantage of the lagging station has saved me a lot of money.
Unless you drive a very small/light car does the added weight of each gallon of gas significantly degrade your mileage? I don’t know. Your statement got me wondering though.
The best strategy is to shop around. Gas prices are high because people willing stop at a place that is a few cents higher a gallon than another place that is just not as convenient. The result of this is that there is no market competition to control the prices. I know a couple cents here and there don’t seem like it would make a lot of difference, but in quantities and over time it adds up.
Sometimes the free market needs a push from consumers.
My car has a 16 gallon gas tank - that’s 96 pounds. A 30 gallon tank, common in many trucks, is almost 200 lbs. I’m sure that’s enough to be noticed on MPG in the long term. If you are looking for a long term strategy I assume it would be enough to factor into the calculations. If you never filled your tank up past halfway you’d certainly get better gas mileage in the long run.
It’s small, but it’s not zero. A 25-gal tank of gas would hold about 150 lbs of gas (water is 8 lbs/gal and gas is about 0.75 specific gravity). Smaller cars are lighter overall, but generally have a smaller gas tank to match (my old Saturn only held 11 gal).
A former coworker said his strategy was to monitor prices daily and fill up the tank whenever he noticed a drop from the previous day. He didn’t fill up if the tank was already 80%+ full, and of course he filled up when it was going empty, regardless of price.
The filling station was on his daily commute (no detour), and he didn’t pay any penalty for frequent fill-ups (such as bank fees)*.
I’m not sure if this is optimal, but at least it’s a strategy.
Come to think of it, some rewards systems offer a higher percentage if your individual fuel purchases are larger, so I guess there can be a penalty there.
This is the sort of thing I’m talking about, and what I think about when I buy gas. It seems like large price changes are more likely in the “up” direction, while stations tend to ease into lowering prices. But I could be wrong. So generally I wait a couple days after a large increase to see if it falls a little before going up again.
I figured it’s like the stock market, but maybe there are some small differences that change things a bit. Like the fact that gas prices usually stay the same throughout a single day while stock prices change with every transaction.
I already (feel like I) know most of the tricks regarding geography. There are stations that are consistently cheaper around here and I visit those predominately. When on road trips, I know the cheaper regions and try to time my gas purchases for those areas. I’m mostly worried about day to day timing. Are there ever any news events that would signal a change in gas prices? Would keeping an eye on OPEC news, Keystone pipeline news, etc. be of any use?
Gas is sold by volume rather than weight. I don’t know how much heat gets down to an underground gas tank, but you can’t be worse off by buying gas when it’s cold rather than warm out. So early morning would be best. You get more energy per gallon that way.
Over the past 6 years living in Southern California, our have averaged 13,000 miles per year. Our current car gets about 32 mpg combined, given our combination of freeway and city driving.
That means that we use about 400 gallons of gas a year. So, assuming i go out of my way to seek out cheaper fuel, even a ten-cent price difference at each fill-up is going to save a total of about 40 bucks a year. Given all the other expenses in my life, and associated with my car, this barely even registers. It happens that i do fill up at a cheap place, because it’s right near my house, but a few cents per gallon here and there simply aren’t worth going out of my way for.
Depends on how much his time is worth. The transaction time for a full tank is not much more than for a partial tank, so multiple fillups is wasting a lot of his time.
I believe most gas stations mark up the cost of the fuel they buy by a fixed amount, so the level of markup and who they buy from are the critical factors. Prices here rise in lockstep, usually once a week, so I’ve seldom seen stations that used to be more expensive than other ones suddenly becoming cheaper.
I’m sure it’s not true any more, but my father was convinced that running a car on fumes was bad for it, so he gave me a gas card with instructions to fill it up when low. My college roommate and his father, on the other hand, competed to see who could get the tank emptier and force the other to get gas. I wonder if it getting too low can have an effect on efficiency.
That’s why i made the point, in my previous post, about not being willing to go out of my way for slightly cheaper gas. My typical fill-up is about 10 gallons (car has a 13-gallon tank, but i rarely let is go down too far), so even if i save a full 10c per gallon on a typical fill-up by going to a different station, that’s only $1 saved.
If it takes me an extra five minutes to go to that other station, i’m effectively working for a rate of $12 an hour. We college instructors don’t get paid very much money, but my time is definitely worth more than $12 an hour.
One reason not to let your fuel get too low is that the fuel itself, in many cars, serves as the coolant for the fuel pump, which actually sits inside the fuel tank. It’s apparently best not to let your gas get really low, because this can effect the cooling of the fuel pump and shorten its life.
If anything, modern cars are MORE sensitive to running down to the last dregs of a tank. Any rust or gunk that’s settled in the tank’s sump over the entire life of the car will just sit there in the sump. *Until *you suck the last ounces of fuel out of the tank. And then the rust & gunk is going down the line and into the fuel filter, pump, and injectors. That will not be good.
As long as you leave a half-gallon or so in there you’re probably fine. But I would not want to burn that last 5% if I could avoid it by refilling earlier.