Every once in a while in the blogging world, you benefit from some serendipitous timing. Over the weekend, I wrote about negotiations going on in Washington to decide future gas mileage standards. Those new standards could require the American auto fleet to hit 62 mpg by 2025.
I got a lot of really thoughtful comments on that post, both for and against, with a few readers, like Jon G, focusing on the amount of time it would take to break even on the higher cost of an electric or hybrid car:
It all depends on one's daily driving situation. I commute 110 miles per day round trip and at that level of travel the extra $10k investment would take 6 years for a 62 mpg car to pay for itself over my current '98 Chevy Prism that averages 32 mpg.
If the real difference, due to the incentives of the tax credit is assumed to be $5k rather than $10k, the payoff now becomes 2.5years. And absolutely YES I would make that trade off!
Of course, the real issue is that I bought the Prism for $3500 three years ago, so the real difference between the vehicles is much much more than simply the difference in the fuel costs.
Then this week, we get a study from the Consumer Federation of America complete with a survey of Americans asking whether they'd be willing to support a 60 mpg standard, even if it meant higher new-car prices. The poll asked the respondents to consider the time it would take for fuel savings to pay off the initial outlay for the expensive fuel-saving systems that would likely be needed to push fuel economy to 60 mpg, asking if they'd support the standard with a three-year payoff period, a five-year payoff period or a 10-year payoff period. The results?
The specific target of 60 mpg is supported by over 60 percent of respondents with payback periods of three and five years. This support declines to the high 50 percent range with a 10-year payback period.
I was frankly pretty surprised at how willing people were to support a 60 mpg standard, even taking into account the higher new-car prices it would entail. After all, it's one thing to support lofty environmental and social goals, but it's another thing entirely to be willing to put up your own money upfront to get there, even with the promise of a break-even point later. Even more surprising, a lengthy 10-year payoff period, much longer than most auto loans, didn't significantly erode support for a 60 mpg standard.
The same CFA study also suggests that break-even point may in fact come sooner rather than later if gas prices continue on their current trajectory. The study found the average U.S. family now pays nearly $3,100 to gas up their cars annually, up more than 50 percent over the 2009 average of just under $2,000.
My feeling is that a 60 mpg standard would end up being good for folks in the frugal community. Because frugal folks tend to drive their cars longer than the rest of the population, at least in my experience, they would tend to reap a higher benefit from the higher sticker price/lower fuel costs trade-off.
What do you think? Are you surprised by the level of support for a 60 mpg standard?