How Annual Fuel Cost Is Calculated (15,000 Miles a Year)

For a gasoline or diesel vehicle, annual fuel cost is the miles you drive in a year divided by the vehicle’s MPG, multiplied by the price of a gallon. The EPA label assumes 15,000 miles a year, and so does this site by default. The result is an estimate for comparing vehicles, because both your mileage and the price of fuel are yours to change.

Key takeaways

• The EPA label’s annual fuel cost is based on two assumptions: an annual mileage of 15,000 miles and a projected fuel price.
• Gallonly uses the EPA label’s combined fuel economy, 15,000 miles and a dated price from the U.S. Energy Information Administration (EIA).
• Prices differ by fuel grade, month and place, so every cost on the site carries its price period.
• Costs are an estimate of what a vehicle would cost under stated assumptions. They are not a forecast of your bills.

The basic formula

Annual fuel cost = (miles per year / MPG) x price per gallon.

Because the price changes, the arithmetic is easier to see in terms of gallons. At 15,000 miles a year, a vehicle rated 30 MPG uses 500 gallons, and every $1.00 of price per gallon is $500 a year. A vehicle rated 25 MPG uses 600 gallons, so the same $1.00 is $600 a year. The table below gives the gallons for several ratings.

Combined MPG	Gallons in 15,000 miles	Each $1.00 of price per gallon is
20	750	$750 a year
25	600	$600 a year
30	500	$500 a year
40	375	$375 a year
50	300	$300 a year

Why 15,000 miles

The EPA label uses an annual mileage of 15,000 miles for its fuel cost and its five-year comparison with the average new vehicle. It is a standard assumption, not a measurement of your driving. Using the same distance for every vehicle keeps the comparison fair. If you drive 10,000 miles, scale the result by two thirds; at 20,000, by one third more. The fuel cost calculator does this for you. The EPA label’s combined value also assumes a 55% city and 45% highway mix; see city vs highway MPG and the combined rating.

Electric vehicles and plug-in hybrids

For an electric vehicle, the formula uses energy instead of fuel: annual cost = (miles per year x kWh per 100 miles / 100) x price per kWh. The EPA’s electric vehicle label bases its cost on 15,000 miles a year and a projected electricity price. The kWh per 100 miles figure from the label already includes charging losses; see kWh per 100 miles and EV efficiency.

A plug-in hybrid uses both. The EPA’s utility factor estimates the share of driving done on electricity, so the cost blends the electric cost per mile for that share with the gasoline cost per mile for the rest. See how plug-in hybrids are rated. Hydrogen and compressed natural gas vehicles are shown without a cost on this site.

Why prices differ by month

The EIA says retail gasoline prices are mainly affected by crude oil prices and the amount of gasoline available to meet demand. Prices tend to gradually rise in the spring and peak in late summer, when people drive more. Summer-blend rules require less evaporative but more expensive components. Supply disruptions at refineries, pipelines or crude supply can move prices quickly. Electricity prices also move: the EIA notes that residential prices peak in summer because more expensive generation sources are added to meet demand.

For this reason a single month’s price can differ from the price you pay on the day you fill up. That is why Gallonly shows the period of every price used.

Why prices differ by state

The EIA lists the factors behind regional gasoline price differences: state and local taxes, distance from supply, supply disruptions, retail competition and operating costs, and special reformulated gasoline in some areas. California gasoline prices are generally higher and more variable than in other states, according to the EIA, because relatively few refineries produce its unique blend.

Electricity prices vary by locality, too. The EIA says they depend on the availability of power plants and fuels, local fuel costs and pricing regulations. Residential prices by state are published monthly in the EIA’s Electric Power Monthly, Table 5.6.A, in cents per kilowatthour. The EIA publishes weekly retail gasoline prices, which include all taxes, for several regions, individual states and cities. See fuel cost by state for how those prices play out in each state.

Which fuel grade is used

If a vehicle requires or recommends premium gasoline, the estimate should use the premium price rather than the regular price. See regular vs premium gas. Diesel vehicles use diesel prices.

Rounding and the full method

Gallonly rounds displayed costs to the nearest $10 and computes every difference from the rounded values, so the numbers on a page add up. The exact steps and data periods are on the methodology page. For ways to bring the number down, see how to lower your fuel costs, and for electric charging see home vs public EV charging costs.