Is fuel price the major cost of owning a car?
I am not an economist--in fact I am the polar opposite of an economist.
I struggled to get a C-minus in Macroeconomics at my nebulous Big Ten school.
However, I did pass Seventh Grade math.
Let's take a look at car ownership--
The average American has a 26-mile commute. I will also give you 45-miles a week to do whatever--like take Junior to football practice or whatever you do.
That's 175-miles a week.
(Note: This is America--we use the English system of measurements around here, soldier! Just like Jesus of Nazareth, Elvis of Tupelo, and Our Mama of Grand Rapids taught us to! If you want to know how far it is in wussy, Socialist Canadian "kilometers," go HERE.)
Times 52; that's 9,100 miles per year that a typical American drives.
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Assume you get 17 miles per gallon--for the purposes of argument.
(They always say you get more than you really do on the sticker. I think they test these cars driving them in the Nevada desert in Winter with a wind at their back on a flat surface with no stoplights or something. And a professional driver...not the jackrabbit maniacs that most Americans are.)
You are using 535.29 gallons of gas.
Gas is $3.79 per gallon at the national average.
Ergo, gas cost is $2,028.75 per annum for the average American--assuming it does not go up even MORE.
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If you just buy a new car from a dealer--and I know you are Mr. Negotiation Hotshot--but I would say it is a safe bet to say that you will lose 65% of the price you paid in depreciation over the first five years.
It is VERY safe to say you lose 13% in the first year.
(In fact, I think you lose about $3,000 driving off the dealer's lot, but I want to give my argument's contrary opinion the benefit of the doubt.)
Let's say you bought a 2008 Mitsubishi Eclipse.
Since we have established that you are such a bad-assed negotiator and the dealer "hates to see you coming," let's assume you paid a flat $20,000. That would be a fairly optioned-out Eclipse if you were a REALLY good negotiator--like you had a suitcase full of cash and somebody needed to win a sales contest.
13% times $20,000= $2,600. That is your depreciation for the first year; conservative estimate.
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Ergo, driving your car off of the lot and parking it in the acid rain in your driveway and just leaving it there will cost you $571.25 more in depreciation, as opposed to the cost of gasoline for actually driving it and burning gas.
(I am being very conservative here. The reason just leaving it in your driveway and not racking up miles will still cost you is that they are coming out with "new, improved!" models with more gadgets and shit on them in more modern body styles while your car is just sitting there.)
We should be more mad at fat car dealers in lime green blazers surrounded by balloons and clowns and screaming at us on TV than we are at oil company execs, I guess.
I realize that $3.79 per gallon is a national crisis to the families on the lower spectrum of the socio-economic strata who are just trying to hold on with a wheezing 1991 Crown Victoria held together with duct tape.
Those people aren't concerned as much with depreciation, and I guess I could go into maintenance and repairs--but that is a wild card; sometimes you get lucky and don't have to many.
The depreciation factor is relatively consistent--like I said, unless you get lucky with a Corvette or whatever.
Just through anecdotal observation--driving around major Southern cities like Memphis, Atlanta, Jacksonville, and New Orleans--I see a lot of bright, shiny new cars: And they seem to outnumber the old clunkers. I think this is partially nouveau riche consumerism--a "keeping up with the Joneses," if you will.
So by and large, I think my cost comparisons have merit.
My theory is that the world would be a better place if most people drove earlier models and just tried to find a good mechanic to keep the car running (and drove more defensively and tried not to wreck)--the bankruptcy courts would be less full, that's for sure.
But they don't.
So depreciation outweighs gas cost for most Americans.
Labels: cost of owning a car, economy, energy crisis, gas prices







