Consider that, I am likely to save 20 Dirham on my weekly grocery shopping every time I visit a hyper market 15 Kms away from my home than to do the same shopping from the grocery store at walking distance. Would it be a wise thing to drive 30 kilometers to and from that hyper market to save 20 Dirham?

Cost of fuel is relatively very low in Gulf and it might sound intuitive to answer Yes to the previous question. However, the true cost of driving 30 kilometers will also include depreciation of car value, increase in likelihood of traffic fines, parts maintenance cost etc etc.

To get the answer, I created this excel spreadsheet and got some eye-opening (my eyes get wide open whenever I calculate my expenses) results. If you too, want to calculate your “Cost of a Kilometer”, follow the below steps. Share your results in comments section for others to know. Formulas to calculate costs are fairly simple and your comments can help me in creating improvised versions.

How to Use the workbook:
  • Download the workbook from http://sites.google.com/site/hammadbinarif/blog/CostofaKilometer.xls
  • Fill in all the Yellow Cells. Most cells ask for fairly basic information. Drop me a comment or email if you have a confusion regarding any cell.
  • White Cells are description of cost factors and Orange Cells are auto-calculated values so you don’t need to touch them.
  • Your operational cost per kilometer will be calculated in Cell G23. This is the cost which will directly increase by driving additional kilometers.
  • Your Total cost per kilometer will be calculated in Cell G24. This will be your operational cost / KM plus time bound costs like Insurance, monthly parking fees etc.
  • To calculate cost of a specific trip, use the work sheet named “Trip Cost”. Enter trip name in column A, and distance in Column B. Column C & D will calculate Total Cost (Good for cost of 1 trip) & Operational cost (Good for comparing alternative trips) for you.
  • Optionally, if you drive outside UAE, you can mention alternative currencies (e.g. USD & Cents, Rs. & Paisa) in Cell J1 & Cell J2. Use Cell G1 to determine the whether you want results in AED or fils (or your currency)


Rest of this article is detail about calculation factors and can be ignored if this is not the topic of your interest.
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Usages: Below are the potential questions which this excel sheet can help answering (or give indication).
  • To use a Car or a metro. Even if you already own a car, use the “Trip Cost” workbook to calculate costs for specific trips. Check “Operational Cost” column as your annual costs will not be affected by this trip.
  • Whether to buy a 2nd car to be used by your spouse or he/she better use public transport.
  • To rent a cheap but distant apartment or not.
  • To go through shorter route by paying Salik (Road Toll) or longer route without toll. (My answer mostly is to pay Salik and use shorter route)
  • How many kilometers should I drive every month if I have a monthly budget of spending 3,000/- Dhms.

Not Included in Calculation: This excel sheet will not help in calculating the following:
  • Cost of Time: Time to drive the car can be utilized in some other productive (or non-productive) alternative. Time required to perform car maintenance, care registration, insurance renewals etc will again have an opportunity cost associated. Cost of time is very debatable topic and I haven’t included it for the sake of simplicity.
  • Cost of Physical effort to drive, mental stress and fatigue caused by long drives haven’t been considered due to their subjective nature.
  • Cost of discomfort when your car unexpectedly breaks down and you keep staring curelessly at your car engine in scorching heat or cold breeze.
  • Cost of acquiring a license to drive.
  • Benefit of comfort of being not dependent on Cab. No need to wait in queue for public transport, and no need to worry about cab when you have an emergency at 4:00 am. This priceless advantage is not considered precisely because its priceless.
  • Benefit of ego boosting of being a car owner
  • Benefit of having privacy while driving. You wouldn’t want to kidnap someone in a cab ;)
  • Cost of Salik (Toll gate) is not correlated to distance or time. It is related to specific locations only and hence i have not included it in calculations. You can add the Salik cost when comparing two alternative trips. 

Approximations: The cost calculation is only approximate due to following factors.
  • Not every factor is 100% correlated with distance. Cleaning/Enhancement/Accidents are only partially related to the distance you drive the car while Maintenance cost, resell value, fuel cost is highly (but not 100%) correlated.
  • Quality of a Kilometer also varies by location. It costs far more (due to fuel consumption and car depreciation) to drive a kilometer in Rolla-Sharjah then to drive a kilometer at Emirates Road. To overcome this, put in your calculations (mileage, maintenance cost) considering your average quality of kilometer in mind.
  • Cost of maintenance per kilometer will increase after every kilometer. Again, you can use average maintenance cost to overcome this.