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Better Gas Mileage as an Economic Stimulus

It’s clear that the American economy needs a kick in the pants. I’ll go out on a limb and propose something so obvious that it sounds crazy … that better gas mileage can and should be part and parcel of any economic stimulus package. It’s well past time we end our reliance on foreign oil.

Better gas mileage isn’t something that should be seen as being a decade away. It’s here right now … you just need to know where to look.

Some folks might say that the automakers aren’t building the fuel-efficient cars they want to buy. That is and isn’t true. The automakers are building scads of cars that get truly remarkable mileage … they’re just not selling most of those here in the USA. Yet.

We’re stuck in a war that seems to have no end. But most Americans aren’t making the changes in their habits that reflects that fact. Too many of our service men and women are at peril every day, but by and large, too many folks are still driving hulking behemoths that struggle to get a mile per gallon (MPG) rating in the high teens.

If you can’t bear to drive anything but a SUV, keep in mind that there’s a new wave of more fuel-efficient SUVs that are available right now. While you won’t see a Cadillac Escalade that gets 40 MPG any time in the near future, there are clear choices that can be made, right now. And there are dozens of cars that get 30 MPG available today.

Run your numbers on our gas mileage calculator. You’ll see clearly how much you can save each month by trading your gas guzzler for something that gets dramatically better gas mileage.

If your current vehicle averages 15 miles per gallon, you drive 20,000 miles per year, and pay $3.25 per gallon of gas, you’re spending $4,320 per year on gas. If you switch to a vehicle that averages 45 miles per gallon, you’ll save a whopping $2,900 per year on fuel.

The amount you save on fuel could represent a big chunk of your car payments.

When you get your economic stimulus check from Washington, think about doing something positive with it. Think about using it as a down payment on a vehicle that gets better gas mileage. Go way out on that limb and think about using it as a down payment on a fuel-efficient vehicle that’s built right here in the USA.

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6 comments ↓

#1 Jake Ludington on 02.22.08 at 12:20 am

A fuel efficiency requirement couldn’t be phased in fast enough to create an economic impact sooner than the next 5-10 years. Over that time span, you’d get more innovation around fuel efficiency by jacking up gas prices to $5-6/gallon, which would force automakers to find alternatives to gas AND reduce dependance on foreign oil at the same time.

I’m all for better gas mileage, I just don’t see it boosting the economy.

#2 mpg-o-editor on 02.22.08 at 7:22 am

@Jake – I’m not a big fan of our government’s recent mandate for 35 MPGs by 2020. That’s too little too late. Legislation isn’t the answer. A motivated and educated consumer base can make this happen purely though market forces. And like it or not, gas prices will go up to $5 a gallon … whether or not that’s due to tax increases (it will more likely be due to continued profiteering).

When people know about the choices that are available they will decide for themselves. Perceptions will change. Look at how the automakers are finally touting MPG numbers in their advertisements (again).

I’ve been driving a domestic SUV over the past week or so that gets 30% better mileage than its conventional gas engine counterpart. Same vehicle, different engine … it’s available TODAY, it’s NOT a hybrid, and it’s not pigdog slow by ANY means …

#3 Randy on 02.22.08 at 12:07 pm

I agree this can be part of a stimulus package. Rather than just hand out $600, why not a tax rebate — to be applied to the down payment — of any car with an EPA rating of 25 mpg or better? Maybe another one for taking a low-MPG car OUT of service, with certification that it was recycled? That would not only stimulate the economy, it would lessen our dependence on buying oil from semi-friendly or unfriendly countries, thus having a positive impact on national security.

It makes SO much sense …that I’m pretty sure the administration would not even consider it….

#4 Greg on 02.22.08 at 8:10 pm

@Randy: EPA rating of 25 MPG prior to 2008 or after? They changed the ratings system in 2008 because the old ones were so pie-in-the-sky (what you’d get driving 48 miles per hour in lukewarm weather on perfectly inflated tires).

But here’s the question for mpg-o-editor… If your car’s paid for, the only way your annual gas savings will be higher than your annual car payments will be if you trade in your 15 MPG SUV for a 45 mpg el-cheapo subcompact.

For someone like me who gets 24 MPG in mixed (78% highway, 22% city) driving, driving 15k miles a year, if I traded to a 40 MPG car, I wouldn’t see savings equal to a $200 a month car payment until gas got over $9.50 a gallon. For a $300 per month payment, I’d either have to trade up to a 60 MPG car (instead of 40 MPG) or see gas prices hit $14.50 a gallon.

Whether it’s an early termination fee on a lease, adding years to your car payment, or taking on a brand new car payment, the economics of changing cars is such that you have to do a lot of driving and see a dramatic increase in mileage and/or gas prices for you to break even.

If the government wanted to stimulate the economy by promoting gas mileage, the best way would be through immediate credits and subsidies on high MPG cars, like they’ve done for hybrids. Raising mandatory standards (like Jake noted) takes too long and the economics of upgrading doesn’t work for many drivers if it’s all out of their own pockets.

#5 mpg-o-editor on 02.22.08 at 9:15 pm

@Greg – the 45 MPG el-cheapo subcompact does not exist in America today. The only two cars that you can buy *today* that deliver those numbers are the Prius and Civic Hybrid … both are nice cars and neither are sub-compacts. Today’s Civic is as large (or perhaps larger) then yesterday’s Accord. I’ll wager that if you drive either of these carefully, you’ll be able to double your present mileage.

That having been said, if you upgrade, you won’t see *pure* fuel cost savings equal to $200 per month at 15,000 miles per year until gas hits $6.40 a gallon.

Regardless, with a brand new car covered under warranty, you won’t have the same maintenance costs that come with a car that’s four year years old. That can be quite a large wildcard …

As vehicles age, you need to take care of the pure maintenance items – tires, brakes, exhaust systems, timing chains, and the like. This can quickly add up.

Switching to a more fuel efficient vehicle won’t make your payments in their entirety … but I’ll maintain that it can substantially offset those costs …

The government needn’t print and spend more money that they don’t have … the public need only understand the benefits and ramifications …

#6 Tim on 04.03.08 at 4:37 pm

Many people forget about the maintenance costs of thier vehicle. A coworker had a 14 year old BMW that seemed to always be in the shop for something or another, I got her to gather together all the receipts and it turned out she was spending close $400 month just to keep it on the road, enough for a new car payment.

Same thing with my 86 Jeep Comanche. I would take it in to something repaired every few months when I could afford it, granted I was trying to slowly restore it while driving it as my only vehicle, never a good idea. When I recently got some budgeting software and categorized all my expenses for 2007 my monthly truck maint cost was $300, wow, I had no idea.

Of course much of my cost was #1 rare vehicle with no aftermarket parts, #2 Manufacturer (AMC) nolonger exists, #3 High demand causing prices including blue book to double in last few yrs and #4 20 yr old electrical components made by Renault in France, and impossible to find in the US. Now that I have a new car and dont have to be driving the truck while it’s rebuilt and I can do more the whole thing at once it’s significantly cheaper.

Put all your credit card and checkbook purchases into MS Money for the last year and you’d be suprised what an older car costs you. At some point, despite it being paid for, it costs you more than a new one, if you work out the TCO.

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