Saving Cash on Gas

Jan 24, 2012 by

Say your neighbor Joe trades in his 15 mpg behemoth for a 20 mpg sedan. Naturally covetous of the money Joe will save on gasoline, neighbor Sue sells her 30 mpg economy car and picks up a 35 mpg gas sipper. While you three neighbors create a traffic hazard chatting in the street about whose doing the best keeping up with the Jones’ (your fourth neighbor), Sue offers this: “Joe, you were smart to get a better mileage car to save money on gas. The car I just bought gets 5 miles per gallon better than my old car—just like you—so now, since we drive about the same number of miles every year, I’m gonna save as much money on gas as you. Ha!”

Playing the Percentages

Sounds reasonable, but Sue is wrong. Sue won’t save nearly as much gasoline expense as Joe. Here’s a simple explanation:

Joe has improved his gas mileage by a whopping 33%, from 15 to 20 miles per gallon:

→ 5 mpg improvement / 15 mpg originally = 33%

That means Joe will cut his gasoline expense by 33% per mile.

Sue improved her gas mileage by only 17%—half as much as Joe:

→ 5 mpg improvement / 30 mpg originally = 17%

So Sue’s gasoline bill will drop by only 17% per mile.

If Joe and Sue drive the same number of miles per year, Joe will save twice as many dollars as Sue on gasoline.

Here’s a graph. (I hope you like graphs as much as I do.)

 

This graph shows how many gallons of gasoline would be saved in a year by someone driving anywhere from 6,000 to 30,000 miles who gains 5 mpg in fuel efficiency.

There are five different trade-in scenarios. The first—going from a 15 mpg vehicle to a 20 mpg vehicle—represents neighbor Joe’s case. So if Joe drives 18,000 miles per year, you see from the big blue square in the center of the graph that Joe would buy 300 fewer gallons of gasoline over the year. Sue’s situation—the purple dot and 30 -> 35 mpg line—shows that she’ll buy just 86 fewer gallons of gasoline during the year.

What this translates to in dollars of course depends on the price of gasoline, but here’s an example assuming gas costs an average of $4 per gallon over the year.

 

Look closely and you’ll see that Joe has set himself up to save $1,200 while Sue will save $343. Of course Joe will still spend far more on gas than Sue—$3,600 vs. $2,000—because his car gets only 20 mpg and Sue’s gets 35.

The Moral

If you’re driving a gas-guzzler, you can save a lot of cash on fuel without trading down to a subcompact-sized vehicle. Though you’d save a lot more if you did, and the Arctic ice might melt a bit more slowly. If you’re already driving a high-mileage vehicle, you won’t get a lot more fuel expense bang for any bucks you spend on an even more efficient car. But that’s because you’ve already taken a big step toward controlling your gasoline expense by driving a high-mileage car. Yay Sue, even if she’s not a math wizard.

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