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Gas for $2.99: Does it make you want to buy?

Chrysler offers gas for $2.99The other day a friend of mine offered me a special deal on buying a new Chrysler car or truck. (Of course, the Viper, Challenger, Wrangler 4 Door and Grand Cherokee SRT8 are excluded, and I really can’t blame Chrysler for doing that.) I really appreciate being included in this offer, and just might take them up on it.

But, a couple of things have come to mind. First, I must like the hybrid or flex-fuel options on any car or truck I choose. My car is five years old, so it has lots of life left. I’m not going to trade my 35 mpg small car for a Charger, as much as I want one.

The bigger question, though, is in the $2.99 gas deal. At first glance, this sounds really cool. The folks at Freakonomics, however, are casting a bit of doubt on the value of this offer. Clearly they didn’t have my gas bills when I was commuting to work every day. So, let’s do a little math, and then I’d love to hear your opinion.

If your commute is 15 miles one way (and that’s conservative in sprawling suburbs, massive metro areas, and even in rural communities!), and your car gets 20 miles per gallon, you’re using 1.5 gallons of gas each day.

  • At roughly $3.70 per gallon, you’re spending $5.55 each day in gas.
  • At $2.99 per gallon, you’d spend $4.49. More than a buck less each day.

The guys at Freakonomics make the point that when you’re buying gas every 1-2 weeks, you’re much more keenly aware of price changes. I’ll argue that I’ve spent a lot of effort in reducing my debt and my spending, and that buck-a-day has an impact on my budget!

Most people work 50 weeks out of every year. That means 250 commuting days each year. Since the gas savings is more than a buck ($1.06, specifically), that’s saving me $265 a year just in my home-work-home commute. Now, let’s add in shuttling kids, running errands, and my husband’s herculean commute. Now we’re talking serious savings.

Yes, there is a limit on the $2.99 gas, but I can’t find any hard numbers. Anyone care to share that with me?

Then, more importantly, is $2.99 gas worth it to buy a Chrysler hybrid vehicle? Like, oh… say… the Aspen two-mode hybrid, complete with cylinder de-activation? Yeah, it has a Hemi®, but still only gets 13/19 mpg according to the EPA. Check out this comparison of the “standard” Aspen against the E85 version, again, courtesy of the EPA. Basically, the standard model gets 13/19, but when running on E85 output can be as low as 9/15 mpg. These numbers are for the 2007 model.  The base model is some $33,000, and can go as high as $45,000 for the hybrid.

It’s so confusing saving money and trying to save the environment at the same time!

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  1. Christy -
    I was going to ask Clay about posting on this. The sale is a RIP-OFF, and the very worst of marketing. The limit on gas is capped at the equivalent of 12,000 miles of driving per year. So, they base this off of the EPA fuel economy estimate found on the window sticker of every car.
    This “deal” also requires that you give-up the current cash incentives on the car. My family was looking at a minivan (yuck) and we figured that based on the current price of gas, it would have to average something like $4.80 the second and third years to even break even.
    Not as good of a deal as they want you to think it is.

    Posted by: Aaron E | May 13, 2008
  2. The topic of gas almost always puts me over the edge. I just don’t *get* how gas companies are posting record profits and we’re spending every last penny at the pumps.
    On another note, some older gas pumps can’t even handle the rising prices – there’s thousands of older pumps out there that max out at $3.99 a gallon. Makes me laugh and get angry all at the same time.

    Posted by: Kel L | May 13, 2008
  3. If it sounds too good to be true, it probably is. Chrysler isn’t going to short themselves, if they offer you this sweet deal, you’ll pay for it somewhere else. It’s no different than the airlines dropping the ticket prices so they look good on the surface, but then when you get to the check-in gate they charge you an extra $25 for each extra bag, or offer no more free meals/drinks on the plane.
    Do your research. Folks that think they’re getting ahead of the system with hybrids too, probably aren’t (unless you’re planning to keep the car for 5 or more years). The added cost of the hybrid, negates the money you save on the gas per year. Add in the cost of what you’ll need to spend on batteries later on, and it’s a tough sell unless you’re super-into being green.
    At this point, the best you can do for yourself is to invest the time into researching, and understand your choices before you jump into anything, and go with what works best for you.

    Posted by: Christopher J. | May 13, 2008
  4. You know, I’ve been thinking… I don’t think that this deal is terrible. I was more taken aback by the Freakonomics conclusion that “the difference in gas cost isn’t worth it.”
    I like this deal, and if they had a hybrid that was a bit more… electric… I’d think longer about this.
    I think it’s great that Chrysler is offering the $2.99 gas incentive. I’m just not ready to plunk down $30k on a new car just yet.
    And, yes, Kelly, the price of gas *does* cheese me as much as it does you. I can’t stand that Chrysler has to do this kind of thing. That’s my real issue with all of this. Car prices are always negotiable… but gas prices aren’t.

    Posted by: Christy | May 14, 2008
  5. Not sure how this is a good deal unless you are counting on gas prices skyrocketing, which I highly doubt will happen. I guess it comes down to a bet, but I’d take the sure thing of the cash rebate over crossing my fingers on gas prices.

    Posted by: Aaron E | May 14, 2008
  6. I didn’t say, “good.” I said, “not terrible.” Now, I haven’t actually priced a vehicle based on “6% over invoice,” because getting that invoice price ain’t that easy. Plus, any car I’d buy doesn’t have cash incentives. So, I’m looking at the straight-up gas costs.
    And, yes, I think that gas prices are going nowhere but up. Then again, I’m no economist. Maybe we need Bobby Walters to comment on that one! ;-)
    Mr. Walters??

    Posted by: Christy | May 15, 2008
  7. Thoughts on gas prices:
    - average American drives about 12,000 miles a year. That’s 230 miles a week. Average car gets about 20 miles a gallon. That’s 11.5 gallons a week. Gas prices are up about $1 in the last year or so. That’s $11.50 a week.
    - There’s no question that, for some folks who are living right on the edge, this is a major economic challenge. HOWEVER, given the breathless media attention given to this, you’d think the Great Depression was upon us. $11.50 a week isn’t a game changer for most people. It certainly doesn’t warrant the nightly media attention given.
    - Saw a TV story (shocker) about a gas station that lowered prices by 15 cents a gallon. There was a line around the block (blocking traffic on a major road) waiting to get that gas. The line was 45 minutes long. Average person filling up a 15 gallon take would save $2.25 (a little more than 1/2 a gallon). Question – how much gas did they burn waiting in that line for 45 minutes?
    - Oil companies and their “excess” profits. This is where people get fooled by large numbers. The oil companies have enormous revenues (and enormous expenses). They are huge enterprises. Because they earn X billion in profits – they are targets for those who won’t look at the big picture.
    - What matters is the PERCENTAGE return on their capital. In other words – are they earning a ridiculous % on the capital invested in the business (which would prove they are gouging). The answer is that they are earning and average profit percentage, when compared with other large companies. But, that doesn’t make people feel better – and people pretty much need a bad guy whenever their lifestyles have been assailed.
    - Why is all the talk about finding blame for high gas prices? Why is there little talk about people doing what they can to lower their gas consumption?
    - Drive a smaller car. Car pool. Drive slower. Walk.

    Posted by: Bob | May 16, 2008

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Wednesday, August 16, 2017