How much money is spent in the USA per year on gas?

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How much money is spent in the USA per year on gas?

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Answer 1

Ask clarifying questions:

1. Do we consider both private and commercial (large vehicle - trucks) vehicle for assessment? - say the answer is only private vehcile

2. Even with in private vehicle, do we have to consider people driving the car for personal use or people driving for Uber and Lyft. The consumption of gas will vary based on the usage - say the answer is vehicle for personal use only

Make equation:

Money spent per year on Gas = total gas consumption by private vehicle in a year * price of gas per gallon

Total gas consumption by private vehicle per year = number of private vehicles in US * (average gas consumption per month per vehicle * 12)

Number of private vehicle in US = number of households in US * average cars per household

Number of household in US = total US population/ average person per household

Assumptions and Facts:

1. Gas price = $3 per gallon

2. Average person per household = 3

3. Average car per household = 1.5

4. Average gas consumption per vehicle per year = 1200 gallon

5. US population = 300 million

Do the Math

Number of household in US = total US population/ average person per household

= 300 million / 3

= 100 million households

Number of private vehicle in US = number of households in US * average cars per household

= 100 million * 1.5 cars per household

= 150 million cars in US

Total gas consumption by private vehicle per year = number of private vehicles in US * (average gas consumption per month per vehicle * 12)

= 150 million cars * (100 gallon per month * 12)

= 150 million * 1200 gallon

= 180 billion gallon

Money spent per year on Gas = total gas consumption by private vehicle in a year * price of gas per gallon

= 180 billion gallon * $3 per gallon

= $540 billion

srinatar · Answer 2 · 2022-11-12T02:19:49+0000

Can I assume that we are focusing not on other petroleum products such as diesel etc. ? - Yes.

money spent on gas = (gallons consumed by americans per year * cost / gallon) + gallons consumed by companies per year * cost / gallon)

assumptions

1. gas prices are quite different between east and west coast. for this exercise, can i assume a median gas price of $4 / gallon. - sounds good.

In US, we have 330M population, assuming 30M as kids and 3 people per household, we have 100M households. now, let us segment them based on how some of these households might be using gas per year.

no usage - Millenials do not prefer cars and wish to live in cities and use either public transport or uber. poor people might not be able to afford cars and rely on public transport only. so, let us skip this segment
low usage - assuming of 20% of 100M households have one small sedan car and fill their tank only once per month.
- 10 gallons / month -> 100 gallons / year (rounding it )
medium - assuming 50% of 100M household have 2 cars and collectively drive up to 20K miles per year. assuming 20mpg per gallon, (20,000/20 mpg) = 1000 gallons per year
- 20K / 40 = 1000 gallons / year
high usage - 20% of 100M household have 2+ cars and on average drive 20K miles per year. let us assume that average mpg is also 20 mpg. (1000 gallons)
- 20K / 20mpg = 1000 gallons / year

so, combining low + medium + high usage comes down to

(20M * 100 gallons/year) + (50M * 1000 gallons/year) + (20M * 1000 gallons/year)

= 2B gallons/year + 50B gallons / year + 20B gallons / year

= 72 gallons / year

= assuming median price of 4$ per gallon

= 72 * 4

= 288B (300B / year) -> individuals

we also have companies . let us assume that we have 10K companies in US. with 50% being SMB and rest being medium and large.

* SMB (<1B) => 50% (5000 small companies) . here, most of these SMB are individual americans running their business from their home or simple mom & pop stores.t most f this segment, we accounted in the previous section. so, for this exercise, we can skip this section.

* Mid size (<100B) -> let us say we have 30% of 10k companies = 3000 mid size companies. let us also assume that each company here might use 1000 gallons per year. this is the segment that might be using trucks and other business related expenses.

1000 gallons * 3000
3M gallons

Large size (<100B) -> let us say we have 20% of 10K companies with 100B+ as market cap. aka 2000 large sized companies. and let us assume that they use 5000 gallons per year for trucks and other business related expenses

5000 gallons * 2000
10M gallon

companies = medium + large = 3M + 10M = 13M * 4 = 52M

total = individuals + companies. = 300B + 10M

= 300B (rounding up)

summary: US spend approximately 300B in gas per year.