The concept is to buy more gas when cheaper (and vice versa) to reduce average fuel cost.
This simple demonstration assumes a commuter uses 1 gallon per day and fills when the gauge indicates empty. The rule is as follows:
Add 5 gallons if price is above the 10 day average, otherwise add 10 gallons.
Prices were randomly distributed between $4 and $5 and a typical output for 1000 days is shown below:
Running 30 tests of 1000 days yields an average savings of 8 cents per gallon.
This result would vary with the rule used and price range.
For example, testing partial fill quantities:
|gallons||cents/gal||% of stdev|
Significant fuel cost savings can be realized by the application of a simple “gas purchasing quantity” rule (as defined above).
When adding regular money to the market, does adding when price is below an average improve returns?