Which gas stations offer the best deal?

The question of which gas stations offer the best deal might seem to be a simple one, but the answer is not as straightforward as you might think. The reason for this is that some stations actually sell you gasoline, while others sell a blend of ethanol and gasoline. Since ethanol blends give you fewer miles per gallon than straight gasoline, the seemingly cheaper ethanol blends may actually be more expensive. According to USA Today, ethanol contains only about two-thirds the energy of straight gasoline.

Here's a hypothetical situation: If gasoline is selling at $3.00 a gallon, and 85% ethanol blend is selling at 30 cents less ($2.70), then the price per unit of 1-gallon gasoline-quality performance (GP, a term I made up to put ethanol and gasoline on even footing as relates to miles per gallon) is:

$3.00 for gasoline
$3.75 for 85% ethanol blend, determined as follows:

0.15 gallon of gasoline = 0.15 units of GP per gallon of 85% ethanol blend
0.85 gallons of ethanol X 67% the energy of gasoline = 0.57 units of GP per gallon of 85% ethanol blend

Total = 0.7195 units of GP per gallon of 85% ethanol blend, at $2.70 per gallon, gives us: $3.75 per unit of GP for 85% ethanol blend.

Realistically, not every state uses an 85% ethanol blend. The numbers above are a high-contrast example of the differences between pricing and economy of ethanol blends and straight gasoline.

So, what's the meaning of all this? Where should I buy my gasoline? The answer in California, where I live, is "wherever it is cheapest." In California, the majority of oil refiners and gas stations sell an ethanol-blended gasoline. With legislation that drops the requirement that gasoline containing ethanol be labeled as such, there's no easy way to tell whether the gasoline you're buying is blended.

Bottom line: if it's that important to you, find out which gasoline is actually cheapest to use in your car. As for me, after running the numbers and doing the research for this article, I'll stick with buying the cheapest, quality gasoline that I can. I typically find that at Arco.

Full disclosure: I don't have any financial interest or stake in Arco/BP.