Is the Cheapest Gas Really the Best Value?

This blog is for me to share with you all that I have learned about adulthood, saving money, discounts, and all kinds of things like that so that you don't have to struggle to learn it yourself!

I caught myself today wondering whether buying gas from ARCO every time is really the best value. I spend $0.35 every time on the debit card transaction fee, so am I really saving any money over using another gas station that's almost as cheap? Well, let's find out!

Gas Quality:

First of all, does ARCO have low quality gas as some presume? Will Chevron gas really last that many more miles? What about higher octanes? Are they really better for your car?

OK, to clear up a common myth: All gasoline comes from the same place. There isn't an ARCO and a Chevron and a 76 gasoline extraction site in the Middle East, etc. All the gas is the same. Different stations add different detergents to the gas. Yes, detergent. The EPA requires that every gasoline has detergent in it, so no matter where you go, you're getting the same gas with different detergent. So stop worrying about the different stations. It's all the same gas.

Second, the octanes are only important if your car needs a higher octane. You should know if it does, and if not it's in your manual. If you don't need a higher octane, you're just wasting your money. To sum up what's going on in layman's terms, cars that can have higher horsepower, aka nice cars, typically have a higher compression ratio. This means they will need higher octane gasoline, which can be compressed more before causing "knocking," which damages your engine and is not good for your car. If your car is a 2000 Chevrolet Malibu like mine (her name is Gilly!), you definitely don't need to shell out for the higher octane gas.

Price and Savings:

So I'm looking at current gas prices right now, and ARCO is currently $3.89. Right across the street is Mobil at $4.03, and there's a Chevron down the street at $3.99. Now I'm going to assume that these price variations remain about the same for these calculations, with ARCO being the base price, Chevron being +10, and Mobil being +14.

After averaging out the last few times I have bought gas, (all at ARCO), I come out with the average spendings of $33.19 each time I go to the pump. Without the $0.35 fee, this comes to $32.84. Assuming the current price of gas has been the average of the last few weeks, I come to the conclusion that I usually buy 8.44 gallons of gas each time. I have a ten gallon tank, this makes sense. If you have a 20 gallon tank, you may need to do your own calculations. Dividing the $0.35 cent fee by that many gallons comes to about $0.05 cents per gallon extra for the debit card fee, bringing ARCO up to a price of $3.94. So it seems that ARCO is still the cheapest.

But wait! There's more! I have a rewards credit card that gives me 2% back on all gasoline purchases. So by using my debit card, I am essentially losing that money by not using my credit card. Considering my average purchase of $33.19 on gas, I would earn $0.66 back each time I went to the pump. Not a ton, but subtracting that $0.66 from the price of buying the same amount from the next cheapest gas station, Chevron comes out to a per gallon price of $3.91. Guess what? That's cheaper than the $3.94 I am spending on ARCO! Turns out, if you have a rewards credit card like me, the cheapest gas is not always the best deal.