Comments on: Dollar cost averaging at the pump for cheaper gas

By: Mirwen

Mirwen — Mon, 24 Oct 2011 16:20:39 +0000

Since you the amount of gas you buy doesn’t vary, I don’t think dollar cost averaging will work. However, when prices are rising, I fill up more frequently and when prices are falling I wait longer. I doubt any of this makes much difference.

My scooter requires premium fuel, and I balked at buying this at first until I realized the “premium” was $2.30 per YEAR based on my use of 15 miles 4 days a week for half the year.

I expect saving a few cents at the pump by changing your timing to have a similar effect, unless you have a gas guzzler. But then you have a bigger problem.

By: WAU: Financial Recovery « The Wealth Artisan

WAU: Financial Recovery « The Wealth Artisan — Mon, 15 Nov 2010 13:04:42 +0000

[...] Dollar Cost Averaging At the Pump by Early Retirement Extreme [...]

By: Caine

Caine — Sun, 14 Nov 2010 01:24:42 +0000

My wife shops at our local Vons and gets cash off an already low price…we then use our PenFed credit card that gives us 5% for using it on gas. We usually save about 20 to 30 cents per gallon.

By: Britz

Britz — Sat, 13 Nov 2010 23:19:03 +0000

My wife drives our car for short kid- and laptop-freighting trips, and I use it once every week or two for bulk shopping. With this low usage, it only makes sense to wait patiently until petrol prices drop to some by-me-fixed level, at which point, I fill up the tank completely. This probably only saves about 10-15% of the already-smallish petrol bill – but that is still about $75-100 each year. Not much, but all gain and no effort.

By: frugalscholar

frugalscholar — Sat, 13 Nov 2010 15:40:33 +0000

I think that if you do the math, the smallish differences in gas prices don’t make that big a difference in the cost of running a car. If your car gets 30 miles to a gallon, a 10 cent difference in prices doesn’t add (or subtract) that much. This is one area where my frugal spouse and I relax.

By: Macs

Macs — Mon, 19 Apr 2010 15:38:55 +0000

Hmmm… this one keeps coming back to haunt me.

Isn’t part of dollar-cost averaging making REGULAR purchases, ie a certain dollar amount per month?

If this is applied to ‘gas’ (sorry, I’m struggling as a Brit, with ‘dollars’ and ‘gas’… )* I feel the system breaks down.

Consider the extremes:

Extreme high price: a fixed number of dollars doesn’t cover a month’s needs (in which case you are NOT buying less of the expensive gas as you purchase more often).

Extreme low price (ha ha ): a fixed number of dollars is more than a tankful, so you don’t get the full advantage of the lower price.

So what’s the practical solution? More storage other than your vehicle’s tank? Or maybe working out an ‘optimum fill’ level at ‘normal’ prices to allow for best averaging given likely market conditions?

Or just give up on the maths, ditch the car and stick to the bike…

* I like the phrase ‘cash-cost averaging’ as a culturally-neutral option

By: Xavier (physics prof at GMU...)

Xavier (physics prof at GMU...) — Sat, 19 Sep 2009 21:47:31 +0000

I’m glad someone looked at my post and it’s too bad I took it down! I did a quick search and can’t seem find it again.

To sum up my methodology and findings, I downloaded many years worth of gas price data and wrote an algorithm that simulated dollar cost averaging over various intervals (like for 5 years, from 1999-2001, for a few months, while gas was expensive, cheap, etc.) and found that sometimes you saved money, sometime you lost money. The amounts were never significant considering the time periods (although ‘significant’ is relative of course).

One thing you always lose by dollar cost averaging is time, and that’s the most precious resource of all.

Speaking of the gas/money/time conundrum, my wife, who is an OB-GYN resident, resets her trip odometer to zero when the ‘empty’ lights up on the fuel gauge and then fills her tank after ~40 mi because she knows that she has 50 mi left after the ‘empty’ light. She does this to minimize the number of times she has to fill up. Now that’s extreme!!! It drives me nuts.

By: George

George — Wed, 20 May 2009 18:53:49 +0000

“I’m bored at lunch.”… thus randomly reading old posts.

Dang, the mason.gmu.edu link reports that the link is forbidden, so I can’t see what the prof had to say.

As I recall, though, dollar cost averaging only brings a benefit if prices are falling. If they’re rising, then you want to make sure you have a stockpile.

By: better off biking

better off biking — Sun, 19 Oct 2008 20:23:26 +0000

a physics prof at GMU did the math and he found that dollar cost averaging at the pump didn’t make any sense:

http://mason.gmu.edu/~xambrogg/NumbersBlog/index.html

By: norcalbiker

norcalbiker — Tue, 23 Sep 2008 03:46:20 +0000

Each fill up takes a certain amount of time e.g. 10 minutes. Saving this time I think is more important than the dollar cost averaging effect. Hence I prefer to just fill up

By: PT from Prime Time Money

PT from Prime Time Money — Sat, 26 Jan 2008 05:35:56 +0000

My wife, the truly frugal one, makes me dollar cost avg at the pump (even though we don’t call it that) b/c I’m always filling up at the convenient location and she says only put in $5 now and I’ll take it to Kroger (where we get .10 off sometimes) next week.