Sometimes coincidences are amazing. Yesterday morning I posted about a bill in Congress that will provide multiple benefits by paying people to retire their old gas clunkers and buy new fuel efficient cars (A Threefer: Stimulate The Economy, Reduce Foreign Oil And Help The Environment).
Later that afternoon, I got an email marketing piece that explained that upgrading old clunkers has a much larger impact on reducing pollution and dependence on foreign oil than improving performance of new, already efficient cars: it all has to do with thinking about mileage in terms of gallons-per-mile rather than the usual miles-per-gallon. Here is how they explain it:
Edmunds.com reviewed the Duke University study and came up with the following illustration. Imagine three cars lined up side-by-side. They all drive 100 miles. Since each car has a different fuel economy rating, they each burn different amounts of gas to travel that same distance.
- 12.5 mpg = 8 gallons per 100 miles
- 25 mpg = 4 gallons per 100 miles
- 50 mpg = 2 gallons per 100 miles
Now look at how much gas is saved in each case. Over a 100-mile drive, the 25-mpg car saves four gallons over the 12.5-mpg car. However, over the same distance, the 50-mpg car saves only two gallons over the 25-mpg car. Taken to the extreme, if there was such a thing as a commercially available 100-mpg car, it would only save one gallon of gas over the 50-mpg car.
"The reality that few people appreciate is that improving fuel efficiency from 10 to 20 mpg is actually a more significant savings than improving from 25 to 50 mpg for the same distance of driving," Larrick said. Soll noted that replacing a large vehicle that gets 10 mpg with one that gets 20 mpg reduces gas use per 100 miles from 10 gallons to five, a five-gallon savings. Replacing a small vehicle that gets 25 mpg with one that gets 50 mpg reduces gas use per 100 miles from four gallons to two, a saving of only two gallons. "Miles per gallon is misleading and can play tricks on our intuitions," Soll said.
"For families and other owners of more than one type of vehicle, the greatest fuel savings often comes from improving the efficiency of the less efficient car," Soll added. "When fuel efficiency is expressed as gallons per 100 miles, it becomes clear which combination of cars will save a family the most gas.”
What can you take away from these insights? Here are some good points:
- Trading in a gas-guzzler for a midsize sedan provides substantial savings.
- Fuel-economy improvements from 12 to 20 mpg are significant.
- Once vehicles get over 25 mpg, the gains are much less dramatic.
- While extremely high-mileage hybrids provide a variety of environmentally friendly benefits, they don't save much more gas than newer midsize sedans.
If you want to save money, sell or trade-in your most inefficient vehicle, especially if it is in the sub-20 mpg category. If you replace it with a new model in the same class and that new vehicle offers just a few mpg in better fuel efficiency, you’ll be purchasing far less gas. THAT saves real money.
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