Interlude: using math to buy cheaper gas

The concept is to buy more gas when cheaper (and vice versa) to reduce average fuel cost.

This simple demonstration assumes a commuter uses 1 gallon per day and fills when the gauge indicates empty.  The rule is as follows:

Add 5 gallons if price is above the 10 day average, otherwise add 10 gallons.

Prices were randomly distributed between $4 and $5 and a typical output for 1000 days is shown below:

blog figs

Running 30 tests of 1000 days yields an average savings of 8 cents per gallon.

This result would vary with the rule used and price range.

For example, testing partial fill quantities:

Partial fill Savings Savings
gallons cents/gal % of stdev
5 8 30%
3 13 45%
1 20 65%

CONCLUSIONS

Significant fuel cost savings can be realized by the application of a simple “gas purchasing quantity” rule (as defined above).

Closing thought

When adding regular money to the market, does adding when price is below an average improve returns?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s