ArcaMax

This gas panic we're dealing with is a lot like any other panic in that people tend to get frantic and feel an urgent need to "do something" - even when that something may not be either necessary or in their best interests. Examples?

Going out and buying a hybrid vehicle - No slam on hybrids per se. They are technologically amazing vehicles and do, indeed, get substantially better gas mileage than most any otherwise similar vehicle. But these fine attributes don't automatically mean that buying a hybrid is the smart move, either.

For one, there's the Trendiness Factor. Because hybrids are popular, dealers are charging full MSRP - and sometimes more - because they can. Demand exceeds supply. If you pay "sticker" (or more than sticker) for a car that, absent surging buyer demand, you might have been able to get for substantially less than sticker, you have just spent money you didn't need to. And  if the mark-up is a thousand bucks (or more) how much gas would that have bought you if you just kept your current vehicle for another year or so - and bought the hybrid after the frenzy settled down and the prices dropped to more reasonable levels? Or maybe bought a used hybrid - and save some dough that way... .

Second, hybrids don't necessarily save all that much fuel. These vehicles are optimized for relatively low-speed (45 mph and less) driving. If you drive mostly on highways - and at speeds above 50 mph - you'll discover that the actual fuel economy of most hybrids isn't all that spectacular. Many conventional economy-type cars actually do better on the highway - and cost a lot less to buy, too. Just FYI.

Fire-saling your pick-up or SUV - People who are investment savvy follow a cardinal rule: Never sell when prices are free-falling (unless you are absolutely desperate and have no choice). Why join the lemmings on their way off the cliff? The current unpopularity of SUVs and big trucks has them sitting stagnantly on dealer's lots - even with the lure of massive discounts being offered by the automakers. The ripple effect of this on the market is, naturally, to depress prices even further - both new and used. And that includes your SUV or pick-up. If you sell or trade now, you will take a bath - and be told to like it.

The smart alternative? Keep your SUV or pick-up and use the thing. The longer you do, the more you amortize (work off) the purchase price - and the more the depreciation curve eventually begins to work in your favor. Sure, it doesn't get great gas mileage. But how does it save you money to sell the thing for a gigantic loss? Which is worse? Spending $75 to fill the thing up - or selling it for a fire sale price and being out of pocket many thousands of dollars more?

Moving closer to work - This one's getting a lot of play in the media and it sounds like a fine idea except for one thing. The real estate market is in the toilet. How does it make sense to sell your suburban home (assuming you can sell it) in order to live closer to your job and thus save on fuel/commuting costs - if you sell your house for less than you probably paid for it a couple of years back?

Nationwide, housing prices have dropped anywhere from 15-25 percent. Not in all markets, of course - but in many of them. Add to this the 3-6 percent off the top that goes to the realtor plus all the lawyer fees, mortgage application and other fees that attend the purchase/sale of a home. Unless you're one of the very fortunate few, it's not likely that it's going to make financial sense to pull up stakes - even if you do end up 10 minutes from work instead of an hour away.

If you bought a place in the 'burbs during the past 5-8 years or so, you're probably better off staying put until the market gets better - $4 per gallon gas notwithstanding.

Buying an E85 (ethanol) vehicle - Ethanol as a fuel may make sense in a country like Brazil - where it's made out of sugar cane and the per-gallon cost is much lower than the cost of gasoline - which makes up for the lower energy content of the ethanol and the fact that your mileage actually decreases as a result by as much as 10 percent or more.

You may have noticed this same thing here in the US during the winter months, when ethanol-laced fuels (so-called "oxygenated" fuels) are mandated in many areas to reduce tailpipe emissions. Suddenly, your car doesn't seem to go as far on a gallon of gas - mainly because it's not gas that's in your tank. The more ethanol, the more your fuel economy drops.   

In this country, ethanol is a giveaway - "corporate welfare" - to large agribusiness cartels that make a killing on the swindle. That may change in the future as other sources of ethanol (including cellulosic ethanol) come online (if they ever do come online). But for now, your best alternative is to stick with that non-alternative fuel, straight up gasoline.

Not thinking before you buy that Moped - Mopeds and scooters are becoming very popular, for the understandable reasons that they are inexpensive (often around $2,000 or so, brand-new), easy to operate and - most important of all - capable of taking you as far as 80 or 90 miles on a single gallon of fuel. That is better than twice the typical real world mileage of the best hybrid cars - cars that also cost 8-10 times as much to buy, too. However, don't forget a few very important reality checks about mopeds and scooters - before you commit to buying one.

First, what happens when it rains (or snows)? If your job requires you to wear a suit, don't forget that mopeds and scooters don't have AC - and leave you exposed to the elements, too.

Second, be aware that the smaller (and highest mileage/lowest cost) mopeds and scooters may not be suitable for use on roads where traffic is moving at more than 40-something mph. The smaller/cheaper scooters are way out of their depth on highways - and even secondary roads where the speed limit/flow of traffic is faster than 40 or 45 mph. Be sure that whatever scooter you get, its power/performance matches the type of riding - and the roads - you expect it to handle.

Lastly, don't forget that while you may save fuel, riding a scooter or moped also exposes you to much more potential risk of injury or death - just like riding a motorcycle. To at least even up the odds, you should buy not just a helmet but also protective riding gear (gloves, pants and boots) and the additional cost of these items should be factored into the math you do before you decide whether buying one of these things makes sense.

========

www.ericpetersautos.com or EPeters952@aol.com for comments.