Free Gas Calculator
What if you could fill up your car’s tank all year long for free — even if gas prices went up to $10 a gallon? Our Free Gas Calculator let’s you play “what if” with the price of gas and shows you how you can benefit even when gas prices go up!
Congratulations!
By investing _____, you have reduced the price of gas to _____ per gallon! You could fill your tank for free each year by investing as little as _____.
This investment is your hedge fund. You can adjust the investment in the calculator and recalculate the return on your investment any time.
Here’s how it works…
Based on the numbers you entered, you consume ___ gallons of gas per year, for a total annual fuel cost of ___. By investing in stocks that track the price of oil, you create a hedge against higher oil prices. When gas prices go up, these return on these stocks generally goes up, too!
Listed below are a number of oil-related stocks and their ticker symbols. The 5-year return shows the profit you would have made if you had made that investment five years ago. The Annual AVG takes that 5-year return and calculates the average annual return. The difference subtracts the average annual return from your calculated annual fuel cost. If the number in that column is shown in parenthesis, your fuel expense was greater than the return on your investment. The remaining columns show how much you “save” per gallon, your net cost for a gallon of gas, and any surplus profit that remains from the return on your investment (maybe you could use it to take a vacation?).
Return calculated as of July 24, 2008
Some of you will recognize that this technique is really not radically new. But it’s surprising how few people think about their money in these terms. If this concept is new to you, and you’ve still got questions, you can leave a comment or learn more here.
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July 10th, 2008 at 2:18 pm
Great idea! I admit I was thrown by the “free gas” thing. I expected a gimmick or scam, but this is really just a common-sense approach to looking at investing. Most of my investment pool goes directly into my retirement fund, but I may rethink that now.
July 25th, 2008 at 10:29 pm
I don’t quite get the whole free gas concept.
July 25th, 2008 at 10:46 pm
Andrew, did you try out the calculator? When you do, you’ll get a detailed explanation of how it works.
In a nutshell, the calculator figures out how much you spend annually on gas. That’s your expense. Based on that figure, the calculator also figures out how much you would need to invest in order to offset that expense.
The investment goes into a stock — especially one that will rise in value when oil increases in price. Typically this includes companies that do oil exploration, drilling and refining. The calculator will show you a table of representative stocks from that category, along with the details of the minimum investment you’d need to make and how much of a return on that investment you would’ve made (based on historical data from the past five years).
Someone left a comment on Digg complaining that this isn’t “free” gas, but I would argue otherwise. Your investment is not an expense. It’s not gone forever (well, as long as the stock doesn’t tank). In fact, as long as you keep the investment, and the returns are good, it could conceivably offset your total annual gas expenses year after year — indefinitely.
Hopefully this helps clarify the concept, but if not, check out this step-by-step explanation: http://www.drivefreeforlife.com/free-gas-step-by-step/
July 25th, 2008 at 11:09 pm
Hmm…this is helpful and worth thinking about. I would do well to learn a bit more about investments and stock, in general but this makes it a bit more worthwhile.
Good idea.
July 27th, 2008 at 2:58 am
Jeff, since we’re on liters and kilometers here in Malaysia, I went to an online calculator conversion site http://www.onlineconversion.com/auto_convert.pl to convert the first three variables into the US equivalents. I left the hedge fund blank and let the calculator do its work.
The result was pretty close to what I spend on gas per year. Don’t think I’d be investing in stocks yet, though.
Thanks for the free gas calculator.
July 27th, 2008 at 8:08 pm
Great feedback, Philip. In theory, you should be able to plug in litres and kilometers rather than gallons/miles and it should still be accurate. This would mean you’d only have to convert your currency to US dollars.
Admittedly, the calculator is targeted at US consumers, but if there were enough interest from other countries, we could add support for other currencies and locales.
July 30th, 2008 at 8:42 pm
Quite an interesting calculator, learn something new every day, in the UK but still quite smart.
August 6th, 2008 at 10:56 am
Interesting concept, but what happens if oil prices go down as they have been recently? And what if the value of your investment drops? Most of the oil stocks have taken a hit recently, since as you point out, they generally track the price of oil.
August 6th, 2008 at 7:49 pm
Marcus, actually that’s a great question. The key is that 1) oil companies are generally (but not always) profitable; and 2) the price of oil rises with demand. There will be fluctuations in the market, which is why the stocks shown in the example shows the five-year return and averages the annual return — some years will be better than others.
The other thing to keep in mind is that this is an investment (not an expense) and a hedge against higher gas prices. If the price of gas comes down, the return will probably be less, but you can also cover your gas costs with a smaller investment. Your bases are covered.
August 8th, 2008 at 11:34 am
Actually Marcus, now is a good time to BUY these stocks. Think about it this way… when you are shopping for a new TV, you look for the sales, right? When stocks are down, you’re essentially doing the same thing; buying it at a discount — “on sale” as it were. Assuming of course you’ve done your homework and the stock wasn’t overvalued in the first place.