You don’t save gas money at Costco
31 May 2008Let’s start with some facts:
- Gas is roughly $4/gallon
- Costco is less expensive than most other places for most items
- Many Costco stores sell gas
- Time is valuable
- People love to save money and will flock to “savings”
Simple facts that few would take issue with. How is it, then, that so many people miss the obvious fact that buying gas at Costco DOESN’T save them money?!
Let me explain by defining some parameters for my example (and yes, they’re simplified for convenience and easy math; I’m illustrating a point here, not proving my arithmetical skills):
- Your car’s gas tank has a 10-gallon capacity.
- You earn $40,000 a year.
- Gas at a non-Costco station is $4.00/gallon.
- Gas at Costco’s station is $3.75/gallon.
- Lines at a non-Costco station at a typical Sat. afternoon are 3 cars deep.
- Lines at a Costco station on the same Saturday afternoon are 6 cars deep.
- It takes an average of five minutes for someone to fill up and pay at either station.
Given these parameters, let’s see why it’s stupid to wait in line to buy “cheaper” gas.
Filling up at a non-Costco Station (”station NC”) costs you $45. That’s $40 for gas (10 gallons @ $4/gal.) plus the $5 it cost you to wait 15 minutes for your turn ($40k/year, an average of 2,000 hours worked per year (40-hour weeks for 50 weeks/year) means $20/hour; 15 minutes is a quarter of an hour, so $5). Filling up at Coscto (”station C”) costs $47.50. I’m sure you could figure this out, but briefly: $37.50 for gas and $10 for the time wasted in line.
That’s a difference of $2.50 more you spent at Costco for “cheaper” gas!
What’s that? I hear the dissenters clamoring to be heard. Oh, I see. Uh-uh… I see. Okay, yes. [nods head]. Let me address your concerns:
- You can go when it’s not busy - Absolutely you can, and I recommend it as it helps keep lines more consistent rather than peaking at the busiest times of the day. But the reality is Costco (and other stations, too) are busiest when people are out more, like weekend afternoons. So I think the parameter is valid.
- It’s stupid to assign a dollar value to time when you’re not at work - Is it? I disagree. I’ve worked on freelance projects outside of work and therefore have a strong sense of what my time is worth outside of the ol’ 9-5 (which is really more like 7:30-5). Time to spend with family, read, be outside, etc. is worth more than my approximate hourly wage from my employer. By virtue of not being work time I think that hour is even more valuable than the dollar amount assigned to it by my employer. And hey, if you want to get fanatical about it, that hour’s economic value is worth more than $20 if you consider benefits and the amount the employer pays on my behalf in training, benefits, taxes, etc.
- Most cars have tanks bigger than 10 gallons - True; but I stated this was an assumption for easy math. But assume the average is 17. gallons. That just increases the amount of the difference by $1.88 (7.5 gallons x $0.25).
- It doesn’t take 5 minutes to fill up a tank - Not for everyone. I try to be very conciensious to my fellow fossil-fuel addicts by pulling up, hopping out, and starting the fill-up process promptly, and getting back in and taking off as promptly as possible. Too few others take the same care. And what about the older person confused by the debit-card payment process, or the (God help their wallets) Suburban drivers with a 30-gallon tank? They take longer than five minutes. It’s just an average for illustration.
- HA! Well, I shut off my engine while I wait so I am saving money that way - Good! That does save gas, and therefore money and carbon spewed into the air. There’s LOTS of research about the effects on mileage of various techniques (slowing down, not driving aggressively, and turning off your engine rather than idling 10 or 20 seconds or a minute). But I didn’t even address the cost of gas wasted while idling, because that’s too variable to figure out. It depends on weather, engine capacity, etc. but still works out to well under a gallon per hour, so the 15 to 30 minute wait in the example would contribute under a dollar to the amount.
- Okay, okay–but you have to save money wherever you can - I agree. But idling in line to fill up isn’t one of them. How about not buying an overpiced coffee beverage instead? At $4 for a 16-ounce flavored lattĂ©, you’re paying $32/gal. Talk about saving money…
