When I went to the gas station at 3 o'clock this afternoon, regular gas was $3.499 a gallon for regular unleaded, 85 Octane. I was filling up the tank of a new 2008 Honda Civic EX automatic Sedan that a middle-school counselor wanted to get to replace her 2002 Chevy Trail Blazer with the V6 engine and almost 97000 miles. She wanted to trade cars for better fuel economy, since she drives a lot and even has a long commute.
Her payment is right around $200 a month on the new car. Let's see - do some quick math:
From theautochannel.com - fuel economy on the new 2002 Chevy Trail Blazer was 15 City 21 Highway 18 average. I'm guessing it doesn't really do that well in real life, especially with 97,000 miles on it. But let's just say it does get 21 mpg on the highway, where my new friend does most of her driving, and let's assume she drives 20,000 miles a year (her family all lives a long way away!)
The 2008 Civic, per the new Federal standards that came out this year, is rated at 25 City and 36 Highway. That's probably pretty conservative, since the car is brand-new and the new ratings are much more accurate than the 2002 ratings. But let's go ahead and call it 36 Highway.
With 20,000 miles a year divided by 36 mpg for the Civic, we get 555.56 gallons per year.
20,000 miles divided by 21 mpg for the Chevy = 952.38 gallons.
The Trail Blazer uses 396.82 more gallons a year. If gas stays at $3.499 (which is very unlikely!) that would cost her $1388.49 more a year for fuel. If gas goes to $4 a gallon and stays there, it will cost her $1587.28 more a year to keep the Chevy. If gas goes up to $4.50 a gallon, she's looking at $1785.69 more a year (and the price of fuel-efficient cars like the Civic will also skyrocket as demand exceeds supply, just like right after Hurricane Katrina hit New Orleans in September 2005.)
A Trail Blazer with 97,000 miles is also very likely to have much higher maintenance costs (tires, repairs, routine maintenance) than the new 2008 Civic... and maybe the insurance is less, too - I don't know.
What is the most sensible choice? Remember, the cost of tires is also going up, since they are made out of petrochemical products. The cost of fuel to deliver the new cars to the dealership is going up, the price of materials and labor seems to keep going up...
Side note: I stopped at King Soopers last night and bought a can of garbanzo beans to put in my salad that I ate for dinner. Last time I bought the same brand, maybe two weeks ago, I think the price was 69 cents - maybe it was 89 cents. Anyway, we can already see the price of everything going up drastically. Yesterday I said this is a great time to buy a new car, especially if you want to trade in a gas-guzzler. It's not going to get any better in the short run, folks. Long-run? I have my own theories, and I will expound on them in the future. We'll see how clairvoyant I am!