It’s Smart to Buy Hybrid Cars Even When Gas Prices are Low
I’m sure you’ve all read or heard people on TV saying that hybrid and electric cars won’t really catch on because oil prices are so low right now. Most of the time the comment goes unchallenged — which is really irritating for a number of reasons.
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If you’re in a polite or reasonably polite conversation on the subject, and someone tries to get away with saying that, remember this little tidbit on OPECs dissatisfaction with current oil prices, brought to us by Bloomberg:
OPEC, supplier of more than 40 percent of the world’s oil, may cut production at a meeting next month if prices and markets are unstable, Iraqi Oil Minister Hussain al-Shahristani said.
“If demand is going to stay down as it has done, then obviously we will need to cut production,” he said at a conference in Doha, Qatar today.
Forbes (via the Associated press) has a little more of al-Shahrisani’s quote:
“At $40 per barrel, very few investors will be willing to invest in developing oil fields,” Hussain al-Shahristani told reporters on the sidelines of a conference Doha, Qatar. “And that’s going to create a big shortage in the world supply, which is not healthy.”
So when someone says something vapid, like “Oil prices are at record lows and there’s no way people will buy hybrid cars,” try not to hyperventilate. Be calm, remember the above and “gently” remind the person that in January, Arabian Business.com quoted OPEC’s target per barrel price at $70. That’s about $2.50-$2.80 for a gallon of regular gas, looking at GasBuddy.com’s historical price charts.
Find a way to work the following into the conversation. Demand and prices drop during a recession. OPEC and the rest of the oil producers are worried about it. They’re also worried about how industrialized countries are moving away from a dependence on foreign energy sources. They’re not panicking, because they’ve seen this before. The Oil Crisis of the 70’s hurt them politically, but they’ve done quite well financially ever since. They’ve seen and heard all the rigmarole about saving energy come and go.
Then say there’s something about this recession cycle that has to be unsettling to oil producers. They have little to guide them when the world economy starts to pick up again. The technology is already in place to cut demand permanently by a few percentage points. Low prices are putting pressure on Arabian governments that use oil money as transfer payments. They see an American President intent on creating jobs in alternative energy, and by extension reducing more demand. Global warming is not fiction (unless you write a conservative column for the Washington Post), and the rest of the world is worried and willing to do something about it. And if Iran’s Ahmadinejad isn’t a reason to go green, then nothing is.
And with that, you should be fully equipped to tangle with those who think cheap oil is an excuse to do nothing. Cheers!
Image Credit: Indigoprime’s Flickr Photostream under a Creative Commons License
Given that oil is a limited resource, and that gas prices are bound to rise, I have to agree with your assessment, Sebastian.
Another observation - what’s with the high concentration of Sebastian’s in the green blogger niche? Sebastian Blanco from AutoBlogGreen, Sebastian James from Gas2, Sebastian Schepis from ZoomiLife.. just an interesting observation. It’s not a common name.
If People understand that for every gallon they buy, part of it funds groups that work against global peace, they might hesitate. These are the same groups we are fighting at war. Someone is double dipping here.
Nick
Electricnick.com
One more reason: the price of gas may have gone down, but what happened to your income?
It is still about need and cost of ownership.
If there is a large carbon surcharge, then obviously that will change the cost comparisons, but until then, I choose economy. And I will wait for a technology solution of which I approve and can afford. And then I will wait until I can buy used.
So James’ comment on income is even more poignant, although probably not in the direction he was intending. My Camry is paid off. So unless I can do an even trade for a new Prius…
In the meantime, research everything with promise. There are great technologies over the horizon. Again, I will wait for them.
BTW, based on my gas usage, even getting a next gen Prius would still take many years to offset the capital cost. Even with gas at $5-6/gallon. So while I enjoy my $1.799 gas, I have a fairly large comfort buffer.
You had me going there until the comment about Global Warming. Aren’t you aware theat the code words are now Climate Change? Jeez, the fact that global temperatures have been declining since 1998 necessitates us to change the language. It was always Climate Change! It will forever be Climate Change! We are always at war with Climate Change! Never mind that we now know that increasing CO2 levels are a result of warming tmperatures, not a cause of it! Never mind that there is a strong correllation between sunspot activity (data going back 7 centuries) and global temperatures! Get with the program! Slip-ups like this can sink the entire socialist control program!
One of the things that you do not mention is actually doing an analysis of the cost of the hybrid and its payback period. For instance, lets say that with the hybrid I get 40MPG and my old car I got 20MPG. If I do 20k miles a year at $4.00 a gallon it is $2,000 vs. $4,000 for gas.
At $2.50 it is $1,250 vs. $2,500.
Given that hybrid sell for a premium over the non-hybrid version and it is often $4,000 more, when is your payback period?
At $4.00 per gallon that is basically two years, not bad. At $2.50 it is 3.2 years. BUT, the stated life of the batteries is 80k miles so at 2.50 I just pay the car off and I need to replace the batteries. This means it will most likely have an effective resale value of zilch. So what did I save? And that is only if I am getting just 20mpg. Many people in the smaller cars are getting better than that, at 30mpg and $2.50 per gallon I only save $417 a year. The payback is 9.6 years, that is a loser right there.
You need to look at the individuals situation and not make blanket statements
Be sure you call your auto insurance man before buying a hybrid; you maybe in for a shock…..
“I’m sure you’ve all read or heard people on TV saying that hybrid and electric cars won’t really catch on because oil prices are so low right now. Most of the time the comment goes unchallenged — which is really irritating for a number of reasons.”
It’s irritating to me too, but for different reasons. The real reasons people are not currently buying electric or hybrid cars is because:
1) Cars with the new generation diesel engines are cheaper and perform just as well (or better depending on driving style) than the current gas hybrids.
2) After looking at the full life cycle of a hybrid vs. a traditional car, people are not sure the hybrid is much greener.
3) New technologies take a while to be accepted. Most people do not want to pay to be someone else’s beta tester. They might do it for a phone, but not something as expensive as a car. Hybrid cars need to become more of a known quantity before some dive in.
Thus, the long term solution/end game will be diesel hybrids (which also capture braking power). But this is going to take a while.
So everyone just stay calm. The world is not going to end if everyone doesn’t go out & buy a Prius tomorrow.
I didn’t buy a Prius because I wanted to save the world. I bought it because I liked the car and reducing consumption of fossil-fuel-based non-renewable energy sources makes economic sense on many levels. By the way, global warming may, in fact, be a myth and cease to exist. And, global cooling may be the next great environmental fad, but that would only mean that demand for energy to heat our homes will increase, so it doesn’t negate the need to use our energy resources wisely. Now, if we could just convince the technically challenged environmentalists on the planet to see the light on nuclear power, we could begin moving into the 21st century and beyond with real hope for improving the quality of life for all humans on Earth.