Are Hybrids Worth It?

PriusThe price for a barrel of oil is now north of $105 a barrel, which will inevitably mean higher prices at the pump.  To help alleviate the burden of $4.00 per gallon gas, automobiles with higher fuel millage are definitely more attractive.  Automakers are understanding the trend, and are producing an ever-expanding array of so-called “green” cars.  But to increase your gas sipping ability using the power of the electron, you’re going to have to pay more up-front…

How much more?  Let’s make some simple assumptions.  First, let’s assume you’ll be driving 15,000 miles a year.  Next, let’s assume that the EPA new mileage are correct (big assumption here, but they’re getting better).  Finally, let’s assume that the price per gallon of gas would increase 10% every year.  That’s a pretty conservative assumption, considering the proce of gas can fluctuate as much as 15% a day!!!

One final assumption – that you own your car the minute you drive it off the lot – in other words, no interest on any car loans…

 So if you crunch the numbers, what do you get?  If you compare a base Honda Civic with it’s hybrid sister, the sweet spot is about $4.50 a gallon in todays world.  Compare the Civic with it’s Toyota cousin, the darling of the media, Prius, and the sweet spot is actually $3.50 a gallon (or about what gas is currently!).

Cost of Ownership

So looking strictly at the numbers, it takes about 5 to 6 years to recoupe the investment of going green.  Not bad.  This also doesn’t factor in any tax rebates your state or the Feds may give you (that’s a post all in itself), so your mileage may vary.

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