Gas prices and red herrings
Gas prices are constantly in the news - there are always short segments when the price of gasoline goes up by 10 cents, or down. Sometimes it’s news when it’s an even smaller jump. There seem to be fewer stories about specific gas stations running specials and having huge lines, and that may simply be because gas stations usually don’t make money on gas (they make it on sales in the store) and pushing a lot of cars through the pumps isn’t the best thing to do anymore.
I’ve always been a little suspicious of these stories as being real news. Certainly, people drive around looking to save 2 or 3 cents per gallon, which seems like a waste of time (and gas) to me. It’s like driving around the city to be able to use a 50 cent coupon. If you’re buying 100 gallons of gas, sure, it can save you 2 or 3 bucks. But with an SUV-sized tank, it might save you a buck, tops, in exchange for lost time, wear on the vehicle, and of course used fuel.
The real question here is whether these little jumps in fuel are really news. The way it’s portrayed, these little spikes have huge impacts on people’s lives - impacting whether families drive places for holidays or not. I don’t know if that’s true, so I figured I’d take a few moments to do some multiplication and division.
A few minutes of searching and a few seconds of math shows that gas prices shouldn’t have a huge impact on driving habits. They can, but only when people have made some pretty poor decisions.
So I stumbled on AAA’s report of what it actually costs to drive a car - gas, wear, etc. (here)
It doesn’t appear to cover everything - items like interest on loans is not covered. But overall, the average cost of driving is 52.2 cents per mile, at 15000 miles per year (national average). (Higher for SUVs)
It also puts the average fuel efficiency at 25mpg. This is pitiful, but Congress is getting right on that to put the standard at 35mpg by 2020. Right on that. China will be at 35 by 2009. Japan’s current average is 45. Anyway..
Gasoline prices right now are averaging (nationally) $3.10. at 25mpg, that’s 12 cents a mile for fuel, or roughly 23% of the cost of driving. What if gas goes up 10 cents/gallon? Yup, it brings the cost to 24.5% of your cost per mile. What if it goes up a whole dollar, to $4.10? That’s 16 cents a mile, or 30% of the driving cost.
To be fair, I’m using data outside of the model that makes the numbers seem worse. The model was done last year(!) at $2.25/gallon. At 25mpg, that’s 9 cents a mile, or 17%. But it seems relatively fair to use current gas prices. Don’t worry, I’ll be consistent with the other side of the argument too.
That was a lot of numbers, and probably too many in one paragraph. So to simplify, remember this - for a vehicle that gets 25mpg, today, gas prices make up about 23% of your driving cost.
What if you drive a car that gets 50mpg? They’re not hard to find. Actually, that whole oil issue in the 70’s generated a number of efficient cars, before our collective attention span reset. You don’t even have to get fancy - a 1990’s Geo Metro will get close to that, and they can be picked up for under 1000 bucks. A diesel Beetle made in the last 10 years can get this. There’s no real need for a hybrid, at least from an mpg standpoint.
At $3.10, a 50mpg car costs 6 cents a mile to run, compared to the above 12 cents. Makes sense, doesn’t it? Double the efficiency, cut the energy required in half. That means that per mile, only 11.5% of your cost is going to gas.
What if gas goes up to $4.10? That still gets you around at 8 cents a gallon, or 15% of the overall cost of running the car.
(And to be fair, at $2.25/gallon, that 50mpg car costs 5 cents/mile, and gas makes up 9% of the over all cost.)
So right now, the choice is, spend 23% of your money just on fuel, or spend 11.5%. Those of you who were paying attention will also have realized that this is really just a matter of ratios, and the numbers themselves don’t matter much at all. It doesn’t matter what gas costs - if you get an efficient vehicle, you can pay 50% of what the buyer of that gas guzzler is paying.
So what’s with the 25mpg average? Please tell me - it seems completely idiotic. I can’t believe the inefficient cars are that much more comfortable. Cushy seats are cushy seats, regardless of fuel efficiency. It can’t be safety, because there have been a number of huge safety issues with SUVs.
I might be convinced that people are swayed by horsepower, but for a loss that big? A Toyota at half the power but roughly half the weight of a Navigator still gets up to speed pretty well on the highway. If you’re really into power, get a roadster and admit it already.
I wish I had a witty way to wrap this up, but I’m mainly just dumbfounded. Are we all just plain stupid?