Do economical cars really save you money?

Driving for Dollars by Terry Jackson • Bankrate.com

Now that the price per gallon of regular gas has moved closer to $2 a gallon rather than the $3 a gallon that the nation struggled with last year, one question looms. If you're in the market for a new car, will you still stick with your resolve to switch to a fuel-thrifty vehicle?

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Putting aside questions about global warming and whether it's the responsible thing to do to curb your emissions by getting more miles to the gallon -- though perhaps that should be the overriding issue -- buyers have reason to wonder about what they will really save if they downsize.

Consider two scenarios:
You buy a sport utility vehicle that gets 20 miles per gallon on regular gas.

Assuming gasoline prices remain at about $2.25 per gallon for the four years you own the vehicle -- an optimistic forecast -- you'll spend about $6,750 on fuel. Here's the calculation: 60,000 miles, or 15,000 miles a year for four years, divided by 20 mpg equals 3,000 gallons times $2.25 per gallon. That's about $1,687 a year at the pump.

You buy a small sedan that gets 35 mpg on regular gas. Making the same assumptions as with the SUV, your cost for fuel over four years would be $3,856, or $964 a year.

So the decision you face is whether it's worth saving $723 a year -- about $14 a week -- to perhaps give up the room, power, style and amenities to which you've become accustomed.

The decision you make could have ramifications beyond your household budget.

Manufacturers have begun to turn their product lines toward more fuel-efficient vehicles over the next few years.

In addition to moving away from truck-based SUVs toward car-based "crossover'' SUVs, like the new Ford Edge, some manufacturers are showing new commitments to smaller sedans. DaimlerChrysler AG, which for years rejected the notion of selling its mini Smart car in the United States, has reversed field and will offer a U.S. version in 2008.

But if consumers forget the sense of panic they felt last year as gasoline prices soared and recommit to the traditional American love affair with big, gasoline-thirsty vehicles, manufacturers will cater to such whims.

The truth is that, as consumers, we get the vehicles we demand. So when choosing your next vehicle, weigh the fuel economy question carefully.

This week's reader questions:

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•	Why can't I find a good deal on a lease exchange?
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