Scooter Journal: Less Gas, More Wienies!

I've begun week 2 of my tenure as a math instructor at SDSU's Upward Bound. As a little extra math homework for myself, I've been keeping track of the fuel efficiency of the scooter I'm driving to work (when the weather is good). In four trips up to Brookings and back on the scenic Norwegian Boulevard, the scooter has averaged 91.3 miles per gallon. At an average price of $3.18 per gallon, I'm getting 28.8 miles per dollar. In those four trips (plus some incidental travel), I've saved $23.81 over what I would have spent on gas had I covered those miles in our Ford Focus.

As a symptom of the general American inability to save money, I find these big savings have inclined me to splurge on fancy meals at the gas stations -- a buck one day for two hot dogs, a buck another day for a burger (with fresh pickles and onions -- thank you, Brookings Cenex!). As I wiped the mayo from my chin, I got to thinking: could my gas savings actually help the local economy?

Consider: gasoline has a low profit margin: 12 to 14 cents per gallon, according to this recent NPR story. At current prices, that's 3-4%. Profit margins on food and beverages vary between 30 and 60%. Let's lowball it and suppose those hot dogs earned the station owner 30%, or 30 cents. Had I covered those miles in the Focus, one gas station would have made $1.56 profit margin. The profit margin from my scooter fill-ups is just 51 cents. However, feeling flush with funds from my gas savings, I've also bought a couple dollars worth of food that I wouldn't have bought had I been in the Focus, adding another 60 cents of profit margin. If I were just a little spendier -- if I'd bought four dollar lunches instead of just two, I'd have contributed a total of $1.71 in profit margin to the station owners, more than I would have just buying gas for the Focus.

So what would happen if everyone found a way to buy less gas -- drive scooters and Priuses (Prii?), carpool, walk -- but dedicate some fraction of their savings, maybe 25%, to buying food from their local station owners. We all spend less money, our local station owners have less revenue but more profit margin. Hmmm... it seems the only party suffering in this equation is Big Oil -- boo hoo.

This casual calculation smells of a free lunch -- I welcome better informed economists and businesspeople to tell me what economic concepts and variables I've grossly misinterpreted.