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Rising fuel costs - an anlysis
Fuel prices got you upset? Should you trade in your gas guzzler?
By Bill Roebuck
Are you outraged that gasoline in some parts of Canada now (June 2008) costs a $1.50 a litre? (That's equivalent to C$6.81 per Canadian gallon or C$5.68 per US gallon.)
Well maybe you shouldn't overreact, because it's still one of the cheapest liquids you can buy.
By the way, current Canadian gas prices make US fuel seem like a bargain, despite its higher-than-normal cost. At this writing, the national average fuel price in the US was just under US$4 for a US gallon.
The following list compares the prices of other fluids to gasoline and helps put the price of fuel into perspective (prices below are in US dollars).
With a 9-oz. bottle of Evian WATER(!!) costing $1.49, it's more than $20 per US gallon! (Of course, Evian spelled backwards is Naive.) Can you imagine if printer companies bought up the automakers and the refineries? They could sell you any car you wanted for next to nothing, charge you inkjet ink prices for the gasoline (see table), and make billions of dollars.
Yes, gas is expensive -- way more expensive than it used to be. But in perspective, maybe it's not so bad.
Even so, you may be thinking it's time to dump the SUV and buy a Prius.
Should you rush out and trade in your gas guzzler for a smaller car in case gas prices continue to escalate? A new study from Consumer Reports magazine says no.
An analysis of its owner-cost data found that it often doesn't pay to downsize if you've only owned your vehicle for three years or less and haven't paid off the loan, even if a new car's fuel economy is much better.
Consumer Reports says consumers should typically hold on to their cars for at least four or five years to minimize the financial impact of depreciation and finance charges.
Depreciation makes up about 48% of an average owner's total vehicle costs in the first five years of ownership, while fuel averages only 21% of total costs. "Based on today's numbers, it's less expensive to tough it out another year or two with a gas guzzler than trade in too early," says Rik Paul, automotive editor for the magazine.
A complete analysis can be found free at www.consumerreports.org.