Diesel price versus cost, or whose $20 is that?
- Thread starter LDB
- Start date
TSexpediter
Seasoned Expediter
The fluke in Leo's calculation
There is one problem in Leo's calculation. He's mixing apples with oranges.
In order to compare the two situations - buying gas in FL or GA - and to get an accurate result, you MUST consider that you buy the SAME amount of gas in each state.
And I'll prove that not the fuel tax makes the difference.
Here are the numbers (I used the same, not actual rates):
FL: 117gal x 2.919 = $341.52
117gal x 0.3057 = $35.76 fuel tax paid at purchase
GA: 117gal x 2.829 = $330.99
117gal x 0.141 = $16.49 fuel tax paid at purchase
Now the tax owed is the same no matter where you buy fuel: $14.91 for FL and 6.78 GA
Assuming we stop after these transactions here's what left our pockets:
FL: $341.52 paid on gas minus credit to be received (35.76-14.91-6.78) = $327.45
GA: $330.99 plus tax owed (14.91+6.78-16.49) = $336.19
So paying in GA lest us short $8.74. And guess where the difference is comming from:
FL: $2.919/gal - $0.3057tax/gal = $2.6133
GA: $2.829/gal - $0.141tax/gal = $2.688
diff = $0.0747 x 117 gal purchased = $8.74
Of course we pay more if we decide to buy fuel in the states where the NET fuel cost is higher. But who keeps a spreadsheet os the fuel tax for each state in his pocket and researches online prices every day and deducts the tax to get to the NET cost???
Now it's a different story for states where the purchase tax is different then filing tax.
There is one problem in Leo's calculation. He's mixing apples with oranges.
In order to compare the two situations - buying gas in FL or GA - and to get an accurate result, you MUST consider that you buy the SAME amount of gas in each state.
And I'll prove that not the fuel tax makes the difference.
Here are the numbers (I used the same, not actual rates):
FL: 117gal x 2.919 = $341.52
117gal x 0.3057 = $35.76 fuel tax paid at purchase
GA: 117gal x 2.829 = $330.99
117gal x 0.141 = $16.49 fuel tax paid at purchase
Now the tax owed is the same no matter where you buy fuel: $14.91 for FL and 6.78 GA
Assuming we stop after these transactions here's what left our pockets:
FL: $341.52 paid on gas minus credit to be received (35.76-14.91-6.78) = $327.45
GA: $330.99 plus tax owed (14.91+6.78-16.49) = $336.19
So paying in GA lest us short $8.74. And guess where the difference is comming from:
FL: $2.919/gal - $0.3057tax/gal = $2.6133
GA: $2.829/gal - $0.141tax/gal = $2.688
diff = $0.0747 x 117 gal purchased = $8.74
Of course we pay more if we decide to buy fuel in the states where the NET fuel cost is higher. But who keeps a spreadsheet os the fuel tax for each state in his pocket and researches online prices every day and deducts the tax to get to the NET cost???
Now it's a different story for states where the purchase tax is different then filing tax.
Re: The fluke in Leo's calculation
Agreed, you wouldn't be able to buy the same amount of fuel since you'll burn some getting into GA that you can't then buy in FL. That aside, the pricipal is the same. You get .yy credit for each gallon purchased at the pump wherever you buy it. You owe the state .xx tax for each gallon burned in the state. The more .yy you can put into your fuel tax piggy bank the less they'll be reaching into your pocket. The principal works regardless of quantity purchased.
I know of a few folks who have the fuel tax chart taped inside their logbook and do plan their fuel purchases. Most don't put that much effort into it.
Agreed, you wouldn't be able to buy the same amount of fuel since you'll burn some getting into GA that you can't then buy in FL. That aside, the pricipal is the same. You get .yy credit for each gallon purchased at the pump wherever you buy it. You owe the state .xx tax for each gallon burned in the state. The more .yy you can put into your fuel tax piggy bank the less they'll be reaching into your pocket. The principal works regardless of quantity purchased.
I know of a few folks who have the fuel tax chart taped inside their logbook and do plan their fuel purchases. Most don't put that much effort into it.
Jack_Berry
Moderator Emeritus
i have a page of fuel taxes on page a6 of my 07 rand mcnally truckers atlas.
sweetbillebob
Seasoned Expediter
We are online in our truck and every run look at full prices along that run. I can often find a $0.15 within states let alone looking at state to state differences. I top off in cheap states when heading to the coasts. If I am forced to buy full on the coast I buy just enough to get back to a cheaper state. I average $0.15 less than the national average, thus saving the boss $150.00 on 10K miles. I have found that picking and choosing between states and within that state more than make up for the $60/quarter that my boss says he has to pay.
Here's another example, current as of today, 3/5/09. Using the significant discount available through my carrier I can buy fuel in Troy, IL. for $1.845 or in Foristell, MO for $1.704 per gallon. Well duh, there's a no brainer. Buy it in MO. right? No, not right at all. Buying in MO. gets you 17.0 cents fuel tax credit while IL. gets you .367 fuel tax credit. That means the fuel costs you $1.534 in MO. but only $1.478 in IL. That's $8.40 more in your pocket right off the bat on 150 gallons by buying the higher price fuel. That's because you only pay for the fuel. The fuel tax money is just on hold to be used as you burn the fuel.
Now let's burn that fuel by running from St. Louis to Chicago to Detroit and back for 1125 miles and we'll say we got 9mpg. That's going to burn 125 gallons. We bought 150 gallons so we have plenty of fuel. If we bought in MO. we got 150*.17 = $25.50 in fuel tax credit. If we bought in IL. we got 150*.367 = $55.05 in credit. To make the math a little easier we're going to say we drove 600 miles in IL, 75 in IN, and 450 in MI. We owe fuel tax to those states on fuel burned at the rates of IL - .367, IN - .27 and MI - .303. At 9mpg we used approximately 67 gallons in IL, 8.5 in IN and 50 in MI so we owe IL $24.59, IN $2.30 and MI $15.15 for a total of $42.04 in taxes due.
Well now, there's a fine kettle of fish if we bought in MO and only got $25.50 total credit. We're short of the amount needed by $16.54 so that has to come out of our pocket. We've also got 25 gallons of that fuel left that will be burned somewhere and we'll owe the taxes on that, also out of our pocket. If we'd bought that fuel in IL. they wouldn't be reaching into our pocket to collect fuel taxes. They'd take $42.04 out of our fuel tax "piggy bank" where we deposited it when we bought the fuel. They'd be paid up and happy and we'd still have $13.01 left in the pig from that purchase. The worst case scenario is we'll get dispatched out toward Chicago again and burn that fuel in IL and owe the tax at their rate. That would be 25*.367 = $9.18 so we'd still have $3.83 left in our IFTA piggy bank from that purchase, provided we bought the higher price fuel in IL. It's higher priced but has the lowest cost. If we bought based only on price then our pockets are a lot emptier because the cost is higher.
Now let's burn that fuel by running from St. Louis to Chicago to Detroit and back for 1125 miles and we'll say we got 9mpg. That's going to burn 125 gallons. We bought 150 gallons so we have plenty of fuel. If we bought in MO. we got 150*.17 = $25.50 in fuel tax credit. If we bought in IL. we got 150*.367 = $55.05 in credit. To make the math a little easier we're going to say we drove 600 miles in IL, 75 in IN, and 450 in MI. We owe fuel tax to those states on fuel burned at the rates of IL - .367, IN - .27 and MI - .303. At 9mpg we used approximately 67 gallons in IL, 8.5 in IN and 50 in MI so we owe IL $24.59, IN $2.30 and MI $15.15 for a total of $42.04 in taxes due.
Well now, there's a fine kettle of fish if we bought in MO and only got $25.50 total credit. We're short of the amount needed by $16.54 so that has to come out of our pocket. We've also got 25 gallons of that fuel left that will be burned somewhere and we'll owe the taxes on that, also out of our pocket. If we'd bought that fuel in IL. they wouldn't be reaching into our pocket to collect fuel taxes. They'd take $42.04 out of our fuel tax "piggy bank" where we deposited it when we bought the fuel. They'd be paid up and happy and we'd still have $13.01 left in the pig from that purchase. The worst case scenario is we'll get dispatched out toward Chicago again and burn that fuel in IL and owe the tax at their rate. That would be 25*.367 = $9.18 so we'd still have $3.83 left in our IFTA piggy bank from that purchase, provided we bought the higher price fuel in IL. It's higher priced but has the lowest cost. If we bought based only on price then our pockets are a lot emptier because the cost is higher.
purgoose10
Veteran Expediter
I agree with the CV. After 40 years in a big truck it just isn't worth the hassle anymore.
This is a good topic though and yes it is confusing to people new in the game, but believe me this is a very important thing to learn if your really wanting to succeed as an owner operator.
But to my fellow CV operators, I'm not trying to stir things up but if we keep spreading around how wonderful no logging, no CDL, No Physicals, no this no that, everybody will want a CV. Then the market is flooded with CV's. Just thought I would throw that in.
Have a great day.
This is a good topic though and yes it is confusing to people new in the game, but believe me this is a very important thing to learn if your really wanting to succeed as an owner operator.
But to my fellow CV operators, I'm not trying to stir things up but if we keep spreading around how wonderful no logging, no CDL, No Physicals, no this no that, everybody will want a CV. Then the market is flooded with CV's. Just thought I would throw that in.
Have a great day.
transporter
Expert Expediter
dakota you dont log or need a physical. what are you driving now?
Dakota
Veteran Expediter
24 foot International under 26K with air brakes/air ride
I do a pre-trip, but since I stay within 100 air miles of Fort Wayne, I don't need to log. The 14 hour rule still applies though, but after 14 hours I wouldn't want to be in the truck anyways
None of the local drivers at Towne Air have to log even the tractor trailers
bluejaybee
Veteran Expediter
I drive a under CDL straight truck and have no logging, no fuel tax, no physical, no hassle and I am home every night
I believe you are supposed to have a physical.
greg334
Veteran Expediter
It already has been flooded and that is the problem.
This topic came up in a phone conversation this evening. When I looked for the sticky to give some info to the caller it was gone so here's a post to refresh it at least for a short while since it can make a noticeable financial difference to the bottom line.
What a great thread! I have learned and saved a lot using the knowledge from this page.
Bump bump for newbies
I have a quick question. I have found 3 different sources for a chart of rates. One being an ifta web site with a disclaimer saying they are not responsible for the accuracy of the info lol go figure. Last week I passed threw MI and on the ifta web site says .3680 cents I only ran about 200 in MI so I figured that would give a lot of carry over to other states, well last night I found on the comdata site a chart that said its only .15 needless to say I feel hosed "again" as a driver lol. What source do you use to get accurate rates for each state?
Bump bump for newbies
I have a quick question. I have found 3 different sources for a chart of rates. One being an ifta web site with a disclaimer saying they are not responsible for the accuracy of the info lol go figure. Last week I passed threw MI and on the ifta web site says .3680 cents I only ran about 200 in MI so I figured that would give a lot of carry over to other states, well last night I found on the comdata site a chart that said its only .15 needless to say I feel hosed "again" as a driver lol. What source do you use to get accurate rates for each state?