Saturday, January 2, 2010

Cost of Driving Your Car - Consumption Rate per Kilometer

With the increasing gas prices sometimes driving a long distance to the retailer or supermarket with your 50 cents coupon may not be a good deal after all. You will save 50 cents, but to get there it may cost you $1.6 in gas, not to mention depreciation of your car since you are putting extra millage. Therefore, it is actually good to know your vehicle's gasoline consumption rate per km, and here is a simple method how to calculate this consumption rate [$/L].

Let A be the Price of the Gas per Litre [$/L]
Let B be the Volume of Car's Tank [L]
Let C be the Total Distance per Car Tank [km/L]
Let D be the Cost of Gas per Km [$/km]

Value of A may change depending on the day. We all know that gas prices are volatile. Value of B is constant, because your car tank will always be the same size. Value of C is approximate, because it depends where and how you drive, your gas consumption may vary; however, just take an average number.

First calculate cost to fill up your tank. For example, your tank can hold 80 L [B] of gasoline. Today price of gas was $1/L [A]. Then it will cost you $80 to fill up your tank. You also know that you can drive about 500 km [C] on your tank.

Therefore to find the Cost of Gas per Km [D] = $80 / 500 km [C] = $0.16/km or 16 cents per km.

Now you have coupon for 50 cents for orange juice. It takes about 10 km back and forth. Therefore, it will cost you $1.60 per that trip. Subtract 50 cents from the cost of your drive. As you can see you are not saving, you are actually spending additional $1.10. Well, you better be doing full grocery shopping then.