How to Effectively Lower the Pump Price: Analysis of Gasoline Discount Programs in Lakewood Colorado

CFLERPA 2023 Award Winner. Wholesale club memberships, grocery store fuel rewards and gas station loyalty programs are gas discount programs that have existed for years, while others, in particular third-party cash back applications are new. In light of the gas price new record high in June 2022 in the United States, we sought to investigate what program is the best to rack up the most savings on gas. To examine the alternative programs, we first identified Colorado Christian University as a central location and defined a 6.7-mile radius based on available discount programs and gas stations. We split the university population into two; faculty and/or staff, and students. The former was a proxy for a high cost demographic i.e. those who spend more on gas and groceries, and the latter was designated the low cost demographic who spend less on gas and groceries. We surveyed the population to collect gas consumption statistics and understand the population’s consumption behavior as well as knowledge and utilization of gas discount programs. We then proceeded to collect data to analyze the gas discount programs with the objective to make recommendations to the two demographics. Overall, for the high-cost demographic, we found that the Kroger grocery points loyalty program was the best savings program if they already spend $300 or more per month on groceries at King Soopers. We further deduced that an average American that purchases about 45 gallons per month can save more through this program than through lower prices offered at Costco wholesale club when we factor in the membership fees. On the other hand, because students, i.e. the low cost demographic, spend less than $300 on groceries according to our survey, and would also likely not care much about buying in bulk at wholesale clubs, we found that they would save more by using a third-party application Upside. These results apply mainly for regular gas, which is the grade of choice for over 75 percent of our respondents in both demographics. The conclusion was the same for mid-grade gas, and similar for premium gas with one exception; if a consumer buys more than 20 gallons of premium gas a month, then Costco is best, even after factoring in the membership fees (and assuming they spend less than $300 at King Soopers or Safeway). Ultimately, we present the data and results interpretation in such a way that any individual can carry out a self-assessment to determine what would be best given their circumstances. Finally, because conclusions are likely to vary depending on location, we present our methodology in such a way that the study can be replicated elsewhere.