Green Car’s Might Not Save You Any Green

by
Steve MacDonald

Green CarThe US Energy Information Administration (EIA) recently released its 2015 Energy outlook.  This report shares details on the nations existing energy positions and projects a wide range of positions out to 2040.  It’s a dry read–that’s actually an understatement–but there are a few highlights.

It turns out that, despite years of Democrats protestations to the contrary, you can drill your way out of high gas prices and foreign energy imports.  From 2005 to 2013 domestic production reduced foreign imports from 30% to 13%. Long rage estimates suggest we could be free of foreign import altogether in as early as 15 years.

Another revelation could harpoon people’s impression of the value proposition of owning a hybrid or electric vehicle.

If you spend the extra thousands because you think reduced emissions are helping the environment, then this won’t matter much to you, though you should do some research on the production and disposal impacts of batteries and who we have to buy the minerals from to make them; this might change your mind.  If you think you are making up the cost difference in fuel economy (saving on the cost of gas) then the EIA has some unpleasant news.

In 2040, compared with gasoline vehicles, fuel cost savings would be $227/year for an electric-gasoline hybrid, with a “payback period” of approximately 13 years for recovery of the difference in vehicle purchase price compared with a conventional gasoline vehicle; $247/year for a PHEV10, with a 27-year payback period; $271/year for a PHEV40, with a 46-year payback period; and $469/year for a 100% electric drive vehicle, with a 19-year payback period.

These results are based on the following assumptions for each vehicle type: 12,000 miles traveled per year; average motor gasoline price of $3.90 per gallon; average electricity price of $0.12 per kilowatthour; and 0% discount rate. For plug-in hybrids it is assumed that a hybrid electric 10 (PHEV10) will use electric drive power for 21% of total miles traveled, and a hybrid electric 40 (PHEV40) for 58% of total miles traveled. The assumed vehicle purchase prices do not reflect national or local tax incentives.

EIA estimates the mean price of a gallon of gas in 2040 will be around 3.90/gallon, with a bottom range near $2.40/gallon and possible high of $6.20/gallon, depending on the range of factors that could impact production.  Six-twenty sounds high, but even if gas prices were to rise to that level, according to the New York Times, payback is more realistic but still a sketchy proposition.

The New York Times, in 2012 wrote…

If gas cost $5 a gallon, the TrueCar data estimates that the payback period for a hybrid Ford Fusion over the conventional Fusion would be six and a half years, compared with eight and a half years at $4. At $6 a gallon, the hybrid Toyota Camry, Hyundai Sonata. At $6 a gallon, the hybrid Toyota Camry, Hyundai Sonata and Kia Optima are likely to generate savings within four years.

Gas is not 6$ a gallon, nor has it ever neared $5.00 (at least in our neck of the woods), but the Times estimates at least offer some glimmer of hope for getting a fiscal return on that green car “investment.”

You could, of course, just drive one to make yourself feel better, as long as you are feeling better at your own expense.

 

Author

  • Steve MacDonald

    Steve is a long-time New Hampshire resident, blogger, and a member of the Board of directors of The 603 Alliance. He is the owner of Grok Media LLC and the Managing Editor of GraniteGrok.com, a former board member of the Republican Liberty Caucus of New Hampshire, and a past contributor to the Franklin Center for Public Policy.

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