Two Ways To Save Money On Gasoline Costs

With national gasoline prices now $1.30 per gallon higher than they were a year ago, motorists are looking for ways to save money on fuel. I can’t save you $1.30 a gallon, but I may be able to get close to that by making a couple of suggestions.

The single most important thing you can do is to make sure you are using the correct grade of gasoline.

According to a report by AAA, U.S. drivers waste more than $2 billion dollars a year by using premium-grade gasoline in vehicles designed to run on regular fuel. Since some readers likely contributed to this windfall for refiners and fuel distributors, let’s consider the nature and function of premium gasoline.

One of my former jobs was as a gasoline blender for ConocoPhillips (NYSE: COP). In that role I became very familiar with gasoline standards.

One of the important requirements that gasoline must meet is the familiar octane rating. In layman’s terms, the octane rating is a measure of the fuel’s tendency to ignite as it is being compressed. Premature ignition can cause engine knock. To measure the octane rating, the fuel is compared to a standard chemical compound called iso-octane, which is assigned an octane rating of 100. That is the standard measure. The lower the octane rating, the more likely it is to knock.

Octane standards vary from one location to another, but “regular” gasoline usually has an octane rating of 85 or 87. “Premium” gas usually has an octane rating of 91 or 93, and costs far more than regular. Right now the average national retail price of premium gasoline is $0.80/gallon higher than regular. That means you could be spending an extra $10 or more every time you fill up your car, and you may not even need it.

While there can be subtle differences among gasoline brands (e.g., Shell and ExxonMobil may use different additives), the octane rating is the most important distinction. However — and this is important — the octane number says absolutely nothing about the quality or the energy content of the fuel.

Premium gasoline is called for in engines that have higher compression ratios. This simply means that the air/fuel mixture can undergo a higher degree of compression, which leads to higher efficiency. If you use a lower octane fuel in an engine with a higher compression ratio, it can knock.

If, on the other hand, you use premium fuel in a less efficient engine, you are most likely just wasting your money. Many people have the impression that “premium” fuel is better for their engine. It is not, unless the engine requires it. Or they believe that premium fuel has a higher energy content. Actually, it may have less.

The best course is to buy premium fuel only if your owner’s manual calls for it. If you aren’t sure, and your engine knocks, then it may be worth trying a tankful of high-octane premium to see if that corrects the problem. But if neither of these conditions applies you would likely be wasting your money.

The second thing you can do won’t save as much as downgrading from premium to regular gasoline, but it can save you a few cents per gallon. Use a site like GasBuddy to compare prices before you go fill up. It’s frequently true that gas stations across the street from each other won’t differ by more than a few cents.

However. looking a bit further you can save a lot more. For example, where I am in Phoenix right now GasBuddy shows a difference of as much as $0.35/gallon across the city for regular gasoline. That might not warrant driving across a large city, but you can almost always save a bit within a short distance of your home by just comparing prices.

Of course, a longer-term strategy is to buy a more fuel efficient vehicle, or even an electric vehicle. But for most people the two suggestions mentioned above could start saving you money immediately.

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