Thursday, September 22, 2005

Prices factor in everything 

I haven't gotten to this in my class yet, but I will. The Eclectic Econoclast reviews the cost-benefit analysis of hybrids.
Even if the cost of gasoline goes to $5 a gallon, the 122 gallon difference would save you $610 and it would still take almost four years ($2,390 divided by $610 is 3.9 years) to recoup the extra cost of the hybrid.
Meanwhile, if you're in an SUV and contemplating dumping it for one of those hybrids or other gas sippers, guess what? So is everyone else, and it's driving down the trade-in value.

We are all speculators. Some of those who bought SUVs speculated that the price of gasoline would stay (in real terms) close to where they were when the vehicle was bought. When the bet goes south, there's no free lunch that allows you to get out of the SUV, into a smaller car and avoid the cost of your action. That money is gone.

Either pay more or substitute for driving the guzzler. Them's your choices.