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People Not Running the Numbers?
Old 11-05-2017, 07:00 AM   #1
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People Not Running the Numbers?

(I guess you can tell I'm between books—more posting all of a sudden.)

At twelve cent per gallon increase in the gas tax went into effect recently here in California. The night before it was to go into effect, there were long lines at the gas stations.

Do you think that those people ran the numbers? That is, did they calculate that they would only save $1.20 if they bought ten gallons? Did they think that was worth waiting in line for?

I figure they just thought, Wow, that's a big decrease. I'd better buy some now.
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Old 11-05-2017, 07:28 AM   #2
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Back when I started driving (a long long time ago) I got into the habit of looking for the cheapest gas station, and rewarding them for their price by buying my gas there. Back then, saving a couple of pennies per gallon was a significant portion of the ~$.27 price. That stuck with me all through the gas crisis of the 70s, and pretty much from then on.

It was only when the price went above $3/gal the first time that I did the math and realized that from a totally empty tank all I'd be able to save would only pay for a quarter of a gallon. Even now I automatically look for the best price, even though I know consciously that it doesn't really matter. It's a hard habit to break.

Having said that, if I find a Costco or something where the price is 10 cents cheaper than other nearby stations, I'll sit in a 4 or 5 car long line to get it. I think my cut off point is if the savings will buy me another gallon I'll go for it.

To answer your question, no, people probably didn't do the math.
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Old 11-05-2017, 07:32 AM   #3
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I won't stand in line for free beer.
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Old 11-05-2017, 07:34 AM   #4
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I do the math.
I ignore prices.
I have to use premium (Audi, high altitude).
I buy Top-Tier fuel after reading copious amounts about it on Bogleheads.
The math? I only buy 250 gallons a year.
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Old 11-05-2017, 07:45 AM   #5
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I figured this out a long time ago.....if I am in need of gas but not desperate I'll fill up at the cheapest gas station I see. Other than Costco there are generally no lines. Even at Costco the lines go quickly since they had a lot of islands and eight pumps at each one.
If I'm desperate for gas I'll just fill up anywhere. The few pennies saved by hunting around aren't worth it, and you will probably burn up the quarter gallon you would have saved anyway.
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Old 11-05-2017, 07:51 AM   #6
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Originally Posted by flintnational View Post
I won't stand in line for free beer.
I almost put you on ignore for this post. But I guess it depends on the beer. A good craft beer, definitely. American bear whiz beer, no way.
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Old 11-05-2017, 07:57 AM   #7
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When I moved across town, I moved further away from the cheapest Exxon station and right next to one that has prices about 5 cents higher most of the time.

Since I don't drive a whole lot, I only get gas once a month. So, I have not been making the trek down to the cheaper gas station. Five cents times about 13 gallons is only 65 cents/month and I can afford that.

If I happen to be driving by the cheaper station and need gas, I'll stop and get it. But otherwise, expensive gas is a luxury I can afford at the moment.

Back to Al's question - - There have been times in my life (long ago, fortunately) when I hardly had any money at all. At times like that, I would have been in those gas lines too. I'd have bought 13 gallons, not 10, and that extra $1.56 plus whatever change I could find in the car, would have allowed me to prepare a somewhat nicer dinner for my family that night.
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Old 11-05-2017, 07:58 AM   #8
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I use gasbuddy when I travel because you can easily save 20 cents a gallon by driving into a different distribution zone or taxation zone. But the pricing in town never varies by more than 2%, so not worth the trouble. I used to do my part to keep prices down by going for the cheapest (reward the guy with the most aggressive pricing), but I'll not go very far out of the way to do that now.

As to the California situation, I bet most of them did do the math, but it doesn't have to be about the money...it could be about the idea of getting in under the wire.
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Old 11-05-2017, 08:07 AM   #9
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I almost put you on ignore for this post. But I guess it depends on the beer. A good craft beer, definitely. American bear whiz beer, no way.
But I will pay for beer. I am FI after all.
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Old 11-05-2017, 08:10 AM   #10
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Also am not a fan of waiting in lines. However I will adapt to new taxes and lessen the profit to government when possible if I feel tax was unreasonable and just an excuse to take without offering more.

Local government imposed a new tax by the ounce for soda, fizz water, and stuff like that.
Increased the cost of a 2 liter soda by something like 66 cents on top of our 11% sales tax and beverage container tax. Not sure if it did beer or wine.

Anyway, I just quit buying soda unless outside the county line, then I would stock up.
I an not anywhere near the border, but drive outside the border every couple months.

I was not the only one. Hear businesses anywhere near the border were losing money on beverage and gasoline sales and proposed millions of tax gain did not materialize although each person voting for the tax increase knew they would be remembered negatively at next election. Tax was repealed but a month or two into the future.
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Old 11-05-2017, 08:14 AM   #11
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Quote:
Originally Posted by TromboneAl View Post
(I guess you can tell I'm between books—more posting all of a sudden.)

At twelve cent per gallon increase in the gas tax went into effect recently here in California. The night before it was to go into effect, there were long lines at the gas stations.

Do you think that those people ran the numbers? That is, did they calculate that they would only save $1.20 if they bought ten gallons? Did they think that was worth waiting in line for?

I figure they just thought, Wow, that's a big decrease. I'd better buy some now.
I thought it was 20 cents and I still did not wait in the line up at Costco to save $2.00.

In your case, just write another book to cover inflation and rip off taxes. The rest of us will have to suck it up and eat a little lower on the food chain a couple of times a month to pay for the road improvements that will allegedly be made.
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Old 11-05-2017, 08:21 AM   #12
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I was also in that situation long ago, only I was single. And young, so my time didn't seem as important, and I could always spend it thinking.

Quote:
Originally Posted by W2R View Post
Back to Al's question - - There have been times in my life (long ago, fortunately) when I hardly had any money at all. At times like that, I would have been in those gas lines too. I'd have bought 16 gallons, not 10, and that extra $1.92 plus whatever change I could find in the car, would have allowed me to prepare a somewhat nicer dinner for my family that night.
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Old 11-05-2017, 08:22 AM   #13
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I hope you didn't mean that to sound as harsh toward T-Al as it came across to me...I'm sure you were just teasing....

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In your case, just write another book to cover inflation and rip off taxes. .
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Old 11-05-2017, 08:24 AM   #14
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Doesn’t matter what I’m buying, I try to buy as cheap as I can
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Old 11-05-2017, 08:29 AM   #15
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Originally Posted by sengsational View Post
I use gasbuddy when I travel because you can easily save 20 cents a gallon by driving into a different distribution zone or taxation zone. But the pricing in town never varies by more than 2%, so not worth the trouble.
In your case that makes sense.
But prices vary by 15-20% just within 5 miles of my home. So the Gasbuddy app is really useful for me.
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Old 11-05-2017, 08:45 AM   #16
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Costco is my default and I try to only go there when the actual store is closed. In the morning this is a 3.5 hour window and after closing a 1 hour window. I keep an eye on gasbuddy otherwise. Before ER drove quite a bit more and gas was a 4K expense so saving 8-10% seemed worth it for a small inconvenience. Was sitting in line last night and contemplating the upsides of an electric car!
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Old 11-05-2017, 08:49 AM   #17
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I do numbers.

We don't wait in line either. Besides, saving a few dollars on gas pales in comparison to the big picture. Sure we buy gas the the cheapest place IF convenient but we won't wait in line or drive a few miles to do it. We have bigger fish to fry.
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Old 11-05-2017, 08:58 AM   #18
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Quote:
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Do you think that those people ran the numbers? That is, did they calculate that they would only save $1.20 if they bought ten gallons? Did they think that was worth waiting in line for?
Behavioral economics suggest that the rational process of "running the numbers" isn't the way the world actually works.

Even financially literate folks (such as the folks here) often don't behave as rationally as classical economic theory would predict. We can see that happen here in posts about paying off mortgages early, selling inherited homes, claiming social security benefits early, etc. Often non-rational factors prevail in many such decisions.

Read books by Richard Thaler, Daniel Kahneman, Dan Ariely, etc, to learn more.
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Old 11-05-2017, 08:59 AM   #19
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And don't forget Jason Zweig.
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Old 11-05-2017, 09:07 AM   #20
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