How much do you spend on Gasoline? Mileage matters big-time!

How much have you, and do you plan to, spend on gasoline? The answer may shock the hell out of you!

I was driving along the other day, and when I saw that my little 1997 car had just rolled past the 135,000 mile mark, I thought about how much it would cost at today's prices to pay for all the gasoline used to drive that far. Well, the calculation is rather simple. Just take the total miles (M) divided by the average MPG (Miles Per Gallon) times the Price per Gallon (P). So, in the case of my car, that is:

135000 / 25 * $3.00 = $16,200!!!! HOLY #$%#$ that is a lot of money (and, that is POST-TAX money, meaning I'd have to earn nearly $25,000 W2 earnings to pay for it!). OUCH! I didn't spend that much on both of my older cars combined!

The only good news for me was that I purchased the car four years ago with 108,000 miles already on it. Whew! But, that still means I would have spend about $3240.00 on gas (at $3/gallon) myself. That is still a bit traumatizing. And here I hesitate to buy an XBox 360 since it'll set me back $500 bucks. heh.

So, I start working out the difference in cost if my car's gas mileage was better or worse than its current average. This car gets a solid 30MPG highway, and nearly that in the city if I am very careful with acceleration and minimizing stops/starts (by leaving ample room between cars, planning ahead if I see lights changing already, and so on). But, the wintertime makes the mileage drop to near 20MPG sometimes (4 cylinder cars seem plagued by this cold-weather effect). Assuming $3/gallon gasoline is the norm, that same 135,000 miles on the car would cost:

• 10 cents / mile at 30MPG, or $13,500 (a savings of $2700 over 25MPG)
• 15 cents / mile at 20MPG, or $20,250 (or, $4050 MORE -- eek!)
• 5 cents /mile at 60MPG (ah yes, dreaming of that super-hybrid mileage!), or $6,750 for a huge savings of $9450.00 ... which, if I was going to put that kind of mileage on a car myself, I'd sure have to consider after reviewing the numbers.

Fact is, we are all so used to just "filling up" the car periodically that we forget how much this gasoline is costing us over time. If any of you have read some of my investment advice columns, you will know I always think of expenses in terms of what it costs in real pre-tax terms (i.e., so you can know how much of your gross-wages / salary is consumed for any particular expense). I'll assume 33% wage taxes (Fed, Local, State, FICA, Medicare burden) for my examples (which means you will need to make $1.50 gross for every $1.00 net / cash you take home)

Keeping that in mind, here's a quick table of just the yearly gasoline expenditures you will make (just gas; no consideration for car maintainence, tires, other consumables) that every year at various miles-driven-per-year, and various MPG, given the current $3/gallon gas:

• 20 MPG CARS:
  
• 5,000 miles at 20MPG: $750.00 cash (i.e., $1125.00 in gross earnings / wages)
• 10,000 miles at 20MPG: $1500.00 cash (i.e., $2250.00 in gross earnings / wages)
• 15,000 miles at 20MPG: $2250.00 cash (i.e., $3375.00 in gross earnings / wages)
• 20,000 miles at 20MPG: $3000.00 cash (i.e., $4500.00 in gross earnings / wages)
• 25,000 miles at 20MPG: $3750.00 cash (i.e., $5625.00 in gross earnings / wages)
• 25 MPG CARS:
  
• 5,000 miles at 25MPG: $600.00 cash (i.e., $900.00 in gross earnings / wages)
• 10,000 miles at 25MPG: $1200.00 cash (i.e., $1800.00 in gross earnings / wages)
• 15,000 miles at 25MPG: $1800.00 cash (i.e., $2700.00 in gross earnings / wages)
• 20,000 miles at 25MPG: $2400.00 cash (i.e., $3600.00 in gross earnings / wages)
• 25,000 miles at 25MPG: $3000.00 cash (i.e., $4500.00 in gross earnings / wages)
• 30 MPG CARS:
  
• 5,000 miles at 30MPG: $500.00 cash (i.e., $750.00 in gross earnings / wages)
• 10,000 miles at 30MPG: $1000.00 cash (i.e., $1500.00 in gross earnings / wages)
• 15,000 miles at 30MPG: $1500.00 cash (i.e., $2250.00 in gross earnings / wages)
• 20,000 miles at 30MPG: $2000.00 cash (i.e., $3000.00 in gross earnings / wages)
• 25,000 miles at 30MPG: $2500.00 cash (i.e., $3750.00 in gross earnings / wages)
• 50 MPG CARS (feel lucky if you have one):
  
• 5,000 miles at 50MPG: $300.00 cash (i.e., $450.00 in gross earnings / wages)
• 10,000 miles at 50MPG: $600.00 cash (i.e., $900.00 in gross earnings / wages)
• 15,000 miles at 50MPG: $900.00 cash (i.e., $1350.00 in gross earnings / wages)
• 20,000 miles at 50MPG: $1200.00 cash (i.e., $1800.00 in gross earnings / wages)
• 25,000 miles at 50MPG: $1500.00 cash (i.e., $2250.00 in gross earnings / wages)

If your car averages under 20MPG, do the math sitting down! If greater than 50MPG, depending on the mileage you put on your car per year, you may well be saving enough to compensate for the premium you paid (if a hybrid), or feel the small / subcompact car you have is well worth the lack of luxury.

You should clearly see that even what appears to be a small difference in average miles per gallon (MPG) can make a large difference on your yearly gas expenditures, and on the drain it places on your income. Likewise, you can see how simply reducing the miles driven per year can make a huge difference as well! Miles per year is the variable you have the most (easy) control over. Next, by opting for a more fuel efficient vehicle you can control (at a cost) the MPG part of the equation. And though the last part of the equation (gas price per gallon) seems completely out of your control, by reducing overall demand for petro, the price will fall -- but, only if it is done by the masses.