Gas prices are jumping up and down regularly. If you drive a large car the cost can be significant between fill ups. Now I am not one to argue about the cost of gas. The stock of the Oil & Gas Company I used to work for has finally reached a price that makes it attractive to sell.
My van burns through the gas quickly. So to manage the ever changing price of gasoline I have started practicing dollar cost averaging when I purchase my gasoline. Most of us have heard of the Dollar Cost Averaging in the Stock Market. Basically you invest a set amount each month in the market. The prices fluctuate but over time your investments even out. Dollar cost averaging is attractive because it takes little work to implement. In fact it can be automated most of the time.
You can apply this same technique to purchasing your gasoline. In my case I chose ten gallons of gasoline as my averaging amount. So when I stop by the gas station I put ten gallons in. By not filling the tank I am poised to save if the price dips. Should the price go up I am not out as much as I would be if I filled the tank.
When the price gets low – say under $2.00/gallon here – I go ahead and put more gas in. Usually fifteen to twenty gallons.
This is all relative. I drive a large vehicle that gets low gas mileage. But if you divide the number of people transported by the cost per mile my travel is actually more efficient than many people with their high gas mileage small cars who travel alone.
To try this with your gas purchases simply determine how much gasoline will fill half of your tank. That is the number I use for my averaging. Give this a try and know that you are averaging paying less in general than you would if you filled your tank at every fill.