Does Saving on Gas Save Money?

Does saving on gas always save you money too? Well, at current gas prices, the answer is no. Consumer Reports did a study on the total cost of ownership comparing hybrid electric vehicles to standard gasoline burners. They found that the higher initial purchase price of the hybrids coupled with a faster depreciation lead to an overall bigger money cost, even though the amount spent on gasoline was lower. The study did find that over five years the Prius and the Civic Hybrid with government tax incentives figured in did better than pure gas burners. Without the tax subsidy, they came out worse money wise.

However, the results of the study depend critically on how much driving you do and the price of gas. The big disadvantages of the hybrids are depreciation and initial cost. Those don't get worse if you drive more miles or if the price of gas goes up. But their advantage, namely lower gasoline expenditures, goes up as you drive more or the pump price rises. So although the hybrids do not save money as well as gas for a typical driver at today's prices, they very well might at tomorrow's higher gasoline prices.

The lesson we can learn from this study is that saving on gas does not automatically mean saving on total cost of ownership; instead you have to figure in your miles driven and the price of gas.

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