Bryan Caplan  

30-Year-Old Gasoline Mystery Solved

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The Westphalian State... Spotted on the Gas Pump at the...

During the last energy crisis in the 70s, adults talked a lot about fuel efficiency. Kids often asked, "If gas costs more, why don't you just drive faster?" Adults usually responded, "You actually burn more gas that way." And then I'd say, "If that's so, why are you speeding to church, mom?"

Thirty years later, I'm pleased to report that James Hamilton now has all the answers:

Air resistance increases the faster you travel, which might lead you to think that higher speeds always require more fuel. However, your car's engine is designed for maximal efficiency in converting fuel into motion when you drive at higher speeds. As a result, the typical car gets much better gas mileage if you drive it at 45 mph instead of 15. However, at speeds above 60 mph, the wind resistance becomes a dominant factor, and miles per gallon for most cars starts to decline significantly if you drive faster than 60.
Hamilton then reports experimental evidence on the fuel savings from going 65 mph versus 75 mph, and calculates the "implicit wage" (untaxed!) of slower driving:
How much money that saves you depends on how much you pay for gas. My table reports three reference values, first a "national average" based on the current average U.S. price of $4.09/gallon, the second a high-priced community (my home San Diego, where it's now $4.59), and the third for one of the cheapest spots in the country (Oklahoma City's $3.76/gallon)-- those prices come from NewJerseyGasPrices.com. You can then convert that to an hourly wage you could consider yourself to be earning for driving more slowly. For example, if you drove that Chevy pickup for approximately 500 miles, you'd do an extra hour's worth of driving, but save yourself $18.70 if you were paying the current national average retail gasoline price.
He suspects that people systematically underestimate the implicit wage of slower driving: "...I would think that many people, if they knew that the immediate financial rewards were on the order of the numbers given above, might choose to drive more slowly. In which case, it is perhaps a public service to help call such numbers to people's attention."

I bet Hamilton's right about the behavioral response to greater awareness of these immediate financial rewards. In my experience, people don't like it when I explicitly count the value of their time (and mine) when making decisions. How many times have I rolled my eyes while someone spent half an hour getting a $5 refund? Their preferred approach, it seems, is to value their time at zero. Knowingly spending $20 worth of fuel to save an hour isn't easy for such people.

At the same time, contra Hamilton, I doubt that calling the numbers to people's attention to the numbers is a "public service." People really hate commuting - it's the most miserable part of the average day. But they're also reluctant to count this misery in their decision-making. Underestimating the implicit wage of slower driving might actually compensate for their stubborn refusal to turn money into happiness.


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COMMENTS (13 to date)
Brandon Thomson writes:

But what about the increased danger associated with driving at a speed where everyone is more likely to tailgate/get angry at you. Surely this cost must also be factored into the calculation.

For the record, I rarely drive faster than 55mph (even on the highway) although my records indicate I get better fuel mileage around 50mph.

Andy Wood writes:
People really hate commuting - it's the most miserable part of the average day.

I don't have time to look this up myself, but do you know whether the misery is caused by commuting at 70mph in freely-flowing traffic outside a city or at 20mph in congested traffic inside a city?

I would assume it's most likely the latter (it is for me - I enjoy driving fast), in which case you'd have to speed up to save money on fuel, and the money spent on extra fuel is compounding the misery of a long commute, not compensating for it.

Stuart writes:

Speed, per se, isn't dangerous. Here in the UK most people cruise on freeways at 80mph or more and we have the lowest accident rate in Europe.

It's unpredictable behaviour that's dangerous.

drobviousso writes:

Hmm. I' must be pretty strange then. When I selected my new apartment, my two biggest criteria were able to take the bus to work and the availability of a dish washer.

Both were explicitly to give me more time during the day.

aaron writes:

More like 10-20 year old mystery. Maybe he should look at newer cars. This deceptive.

I used the same curve from doe and calculated using my after tax wage, that gas would need to cost $6.88 a gallon. At $3.60 a gallon, it made sense to slow down for people worth less than $5 and hour.

Here are calcs using the BTS average of 1.63 occupants per vehicle:

31556926: seconds per year
303824646: people (US population, 2007 est, CIA World Factbook)
1.386E+13: $ (GDP 2007 est, CIA World Factbook)
1: year

0.001445591: $/person-second ($4.97 per hour per person)

4.09: $/gallon Gasoline
30: mi/gallon (gas consumption at 55mph, http://www.consumerenergycenter.org/transportation/consumer_tips/speeding_and_mpg.html)
28: mi/gallon (gas consumption at 65mph, http://www.consumerenergycenter.org/transportation/consumer_tips/speeding_and_mpg.html)
25: mi/gallon (gas consumption at 70mph, http://www.consumerenergycenter.org/transportation/consumer_tips/speeding_and_mpg.html)
23: mi/gallon (gas consumption at 75mph, http://www.consumerenergycenter.org/transportation/consumer_tips/speeding_and_mpg.html)
1.63: Average number of occupants per vehicle from BTS

gallon $ miles hour
________________________________________
mile gallon hour second persons $/hour

1 4.09 55 1 1 224.95
30 1 1 3600 1.63 176040
At 55 mph, an average vehicle burns $0.001277835/second per person or $4.60 an hour.
1 4.09 75 1 1 306.75
23 1 1 3600 1.63 134964

At 75mph, $0.002272828/second per person or 8.18 an hour.

1 4.09 70 1 1 286.3
25 1 1 3600 1.63 146700
@ 70, 0.001951602, $7.03 per hour per person
1 4.09 65 1 1 265.85
28 1 1 3600 1.63 164304
@ 65, 0.001618037, 5.82 an hour per person

The difference between 75 and 55 MPH is $3.58 per hour per person. That's 28% less than the average productivity per hour per person, which is $4.97.

Matt C. writes:

Perfect reason to tailgate. According to Myth Busters television show you can decrease the wind resistence on your car by over 90% by driving 2 feet from the back of a semi trailer. How would you calculate Risk/Reward there?

aaron writes:

Average cost of fuel per passanger recalculated using the actual 1997 numbers rather than estimates from the curve.

@ 55MPH, $5.89 per person per hour
@ 75MPH, $7.59 per person per hour
@ 70MPH, $6.55 per person per hour
@ 65MPH, $5.59 per person per hour

The cost difference between 55 and 75 MPH is even lower than I thought, just $2.30 per hour per person, or $3.79 per vehicle.

aaron writes:

Oops, transposed the numbers in the 55MPH fuel economy:

@ 55MPH, $4.26 per person per hour, $6.94 per vehicle per hour.

@ 75MPH $7.59, $12.37

@ 70MPH, $6.55, $10.68

@ 65MPH, $5.59, $9.10

That's a savings of $3.33 per person per hour or $5.42 per vehicle per hour. Still 33% less than the average productivity per person per hour of $4.97.

Ned writes:

Saving time is not the main reason people exceed speed limits. Under normal conditions, driving at the speed limit is like being forced to read this blog at the speed of 8 words per minute - it's just frustrating.

Dave writes:

The problem with calculating the wage equivalent of any activity is that it assumes I could have been earning money instead during that same time.

My salary works out to about $40/hour, but I'd gladly spend an extra hour commuting to save $15. After all, not spending that hour would result in a net gain/loss of zero.

aaron writes:

Ironman at political calculation has made a tool to calculate just how much you can save.

Steve Sailer writes:

In green-crazy LA, the average freeway speed in the rare moments when traffic isn't a limiting factor is 74-82 mph.

I've never heard of anybody in LA who drives 65 to save the planet.

The Green Movement seems to be mostly about shopping more fashionably.

Good points, but I'd add some important related ones. How much your time is worth to do a job depends also on how pleasant the job is and other non-pecuniary benefits. If I really enjoyed driving and didn't have to do it that much, it might be worth getting a wage of only $18.70 to do it, even if spending that hour working at my job would earn me $40. For that additional hour I would get a lot more enjoyment out of driving than working an additional hour at my job.

There's definitely a benefit to mowing the lawn or raking the leaves as a way to get away from a professional job and relax, even though the money you save per hour is a lot less than the money you could have made if you had spent yet another hour at your professional job.

In addition, note that the $18.70 you make driving is tax free, so its like $27/hour at a regular taxed job. There's also the benefit of the decreased chance of collision and tickets, and possibly decreased wear and tear on the car. All this might add another $10 or more to the wage making it $37+, much higher than the median wage.

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