What Is Fuel Efficiency Really Worth?

Written by Trent Hamm, The Simple Dollar is a popular personal finance blog that chronicle's one man's road back from overwhelming debt to financial security. Hamm declared the contents of the blog to be in the Public Domain in 2008 and available for sharing when attributed properly. We will share a couple of posts a week.

 

 

What Is Fuel Efficiency Really Worth?

 

 

A few days ago, I posted an article on saving money on fuel during your commute. While all of those tips were useful, one in particular can really reduce your fuel costs when commuting – buying a more fuel-efficient car. But what does that really mean in terms of dollars and cents?

 

Before you even begin talking about how much you’re saving in terms of increased fuel efficiency, you have to determine some of the numbers you’re working with.

 

First off, how much does a gallon of gas cost? Right now, the gas station nearest to my home charges $3.999 for a non-premium gallon. So, we’ll go with that – $4 per gallon.

 

You also need to know how many miles you expect to get out of your car after you buy it. It really depends on the age of the car that you buy. If you buy a new or nearly new car, you might get as many as 150,000 miles out of it. For an old car, you might be lucky to get 50,000 more miles out of it. Let’s go with a happy medium – 100,000 miles.

 

So, what is fuel efficiency actually worth when you’re buying gas at $4 per gallon and intend to cover 100,000 miles in that car? Let’s look at some different fuel efficiency numbers.

 

If the car you buy gets 15 miles per gallon, that means it’s going to slurp down 6667 gallons over the time you drive that car. At $4 per gallon, that adds up to$26,668 in fuel costs.

 

If you bump that up to 20 miles per gallon, that means it’s only going to use 5,000 gallons over the period that you own the car. At $4 per gallon, the total fuel cost is $20,000.

 

Let’s say your vehicle gets 25 miles per gallon. In that case, it only uses 4,000 gallons over that 100,000 mile life span. At $4 per gallon, that adds up to $16,000.

 

What about 30 miles per gallon? If you’re looking at 30 miles per gallon, the vehicle consumes only 3,333 gallons of gas. At $4 per gallon, that adds up to$13,334 in fuel costs.

 

What about 40 miles per gallon? In that situation, you’re looking at a consumption of 2,500 gallons over the life span, which, at $4 a gallon, adds up to only $10,000 in fuel costs.


Fuel efficiency is a tremendous savings. If you choose a 40 mpg car over a 15 mpg car, you’re saving $16,668 in fuel costs over the next 100,000 miles (assuming fuel stays at $4 per gallon). That’s enough to buy your next replacement car.

 

A good rule of thumb to use, assuming you are going to be driving the car for a long while and assuming that fuel prices continue to inch upwards, is that for every single mpg that one car has higher than another car, you’re saving $1,000 in fuel over the lifetime of that car. It’s not a perfect rule and it particularly breaks down for comparing cars well above 25 miles per gallon, but it’s a good one for giving yourself an estimate of the value of fuel efficiency when shopping around.

 

Fuel efficiency is simply an enormous financial consideration when buying a car. Buying a car that is 10 miles per gallon more efficient in terms of fuel consumption than the other option can easily save you $10,000 over the lifetime that you own the car. Keep that in mind when you shop around.

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