Fuel economy is measured in two philosophically opposite ways. The U.S. uses miles per gallon (mpg), where bigger is better. Most of the world uses liters per 100 kilometers (L/100km), where smaller is better. The UK uses miles per imperial gallon, which is about 20 percent larger than the U.S. gallon — so 40 imperial mpg is only 33.3 U.S. mpg, a comparison trap for transatlantic car shoppers. Converting between mpg and L/100km is a reciprocal relationship: L/100km = 235.21458 / mpg (U.S.), and mpg (U.S.) = 235.21458 / L/100km. For imperial mpg, the constant is 282.481.
Why the reciprocal matters: fuel savings are not linear in mpg. Going from 15 to 20 mpg saves far more fuel than going from 40 to 45 mpg, because each additional mpg represents a smaller slice of consumption. The L/100km scale is linear in fuel used, which makes it the honest scale for comparing costs: a car at 5 L/100km always uses exactly half the fuel of one at 10 L/100km, while 60 mpg is not 'twice as good' as 30 mpg in any linear sense — well, actually it is exactly twice the distance per gallon, but the gallons saved per year diminish. For budget math, convert to L/100km (or gallons per 100 miles) first.
To estimate annual fuel cost from economy: divide annual distance by the economy figure in matching units, then multiply by fuel price. A car driven 15,000 km/year at 7.5 L/100km burns 15,000/100 x 7.5 = 1,125 liters per year; at $1.50/L that is $1,687.50. This calculator converts between mpg (U.S. and imperial), L/100km, and km/L.