Thursday, March 22, 2012

Save Gas In Rising Prices?

I need a second car, small, with high mpg. I thought a hybrid or even an electric would be a great choice, with gas prices going up the way they are. But after a little research, I realized that is not going to happen.

My current car is a 2005 Scion xB that gets, on average, 28 mpg, well over 30 on a straight, flat highway, no passing, no air conditioning. That was terrific mileage back in ’05, but today I would expect a lot more.

The Toyota Prius is the hybrid mileage leader at 45 mpg, or 40 mpg in the city. I used the more optimistic figure of 45 mpg for my comparisons.

Other hybrids, like the Honda Civic and the Ford Fusion get closer to 40 mpg, less in the city. Some, like the Kia and Hyundai hybrids, are optimized for city, so they get 40 in the city and less on the highway. So I took 40 mpg as my point of comparison for non-Prius hybrids.

Any of those numbers sounds a lot better than my measly 28 mpg, as gas approaches $4 a U.S. gallon. It’s $3.70 right now where I live, but climbing inexorably. I am mentally prepared for $5 gas within a year.

But the clinker is the new car price. Hybrids command an $8,000 premium, on average. I can get a traditional gasoline-only small car that meets my needs for a second car, easily, for $20K. But a hybrid of comparable size, power, and cargo space will cost $28K on average. Sure it’s possible to get into the hybrid game for $24K, but it’s also possible to buy a perfectly adequate gasoline-only car for 17K. I’m comparing at a level of features that meet my needs, and at that level, hybrids are $8K more money.

Maybe I should have bought five years ago when there was a $7,500 tax credit for hybrid cars. But I didn’t have the need then. This is now, and there is no tax credit now. A hybrid buyer just has to eat the hybrid premium.

What about an all-electric? I live in the southwest U.S. where it is 25 miles round trip to the grocery store, 50 to school and 70 to the doctor, so I need plenty of “range,” which only the Chevy Volt can offer. (It’s nominally all-electric, though it has a tiny gasoline “assist” engine). A Volt costs about $40k. There is a tax credit of about $2,500 for an all-electric, so the net is $37.5K. That’s a whopping $10,000 price premium. The other, cheaper electrics don’t have range, so it’s Volt or nothing. Nothing is cheaper.

Going back to the $8000 hybrid premium, wouldn’t I save that much in gas purchases in a short time? Alas, no. I don’t commute every day and often my car doesn’t even leave the garage two days out of the week. My annual mileage is only 8400. So I burn 300 gallons of gas in a year. For $5 gas, that is $1500 a year in fuel (and of course I am not actually paying $5 yet!)

If I had a Prius, I would need only 192 gallons a year, costing me $933, an annual savings of $567. That savings would be nice, but it wouldn’t go very far toward offsetting the $8,000 premium I had to pay to get the Prius. It would take me almost 14 years to break even! The warranty on a Prius is only 5 years.

Ah, but what if the price of gas really went through the roof, which it well could? What if gas ramped up to $12 a gallon? The Prius, with its 45mpg would cost me $2,240 annually in fuel, compared to my current clunker, which would cost an eye-watering $3,600. That’s a monster savings of $1,360 a year for the Prius. Unfortunately, that still is more than a six-year break even.

Of course the savings calculations are even less favorable for hybrids other than the Prius, with their lower mpg ratings. So the obvious conclusion is that the savings in fuel costs I could expect from a hybrid do not even come close to balancing the premium I would have to pay to get the hybrid in the first place. The calculations simply scale up the same problem if I were driving 12,000 miles or more a year. The math just doesn’t work.

I could tell myself I would be contributing to America’s effort to reduce dependence on foreign oil, so maybe that $8000 hybrid premium is worth it. Maybe it is, to some rich person. For me, $8000 is a lot of money to donate just because the U.S. congress is incapable of passing a rational energy policy. No thanks; it’s not worth subsidizing incompetence to that extent.

And here’s the sick part. When I look at the mpg of smaller, lightweight “crossover” vehicles, gasoline-only, like the Honda CR-V, I see mileage ratings like 22/32, which isn’t even as good as I get now with my aging box. The new Scions, regrettably, are bigger and heavier and now get only 22/28, no improvement for me. I could get a tiny 2-seater Like a Scion IQ or a Smart, that will make 37 mpg, as long as I stayed away from the freeway, where I would be crushed like a bug by one of those 18-wheelers smoking north out of Mexico.

Or I could bow to harsh reality, and go for a traditional smaller sedan with mileage only slightly better than what I get now:
Chevy Cruz 28/42
Chevy Sonic 30/40
Ford Fiesta 29/40
Ford Focus 28/40
Honda Civic 29/41
Hyundai Accent 30/40
Hyundai Elantra 29/40
Hyundai Veloster 30/40
Mazda 3 28/40


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