patrick.net

I think it would be 6-9 months for sustained ~$5/gal gas to start to push the US into a recession, closer to 9 than 6 months normally except the high unemployment and underemployment have made the economy more fragile than usual.

We'll see, but I think gas will get over $5/gal and stay there late this year, assuming the Fed goes all out with a QE3 or extended and expanded QE2.

tts says

We’ll see, but I think gas will get over $5/gal and stay there late this year, assuming the Fed goes all out with a QE3 or extended and expanded QE2.

Quite possible. We'll probably hit $4/gal nationally in early May, almost certainly by Memorial Day. Peak should be sometime mid-summer, if this trend mirrors the 2008 oil spike.

So I guess it depends if oil crashes mid-summer or whether it levels off but keeps on creeping up through the fall. Demand is showing signs of weakening already, but there are legitimate supply concerns that could keep oil/gas elevated at $4-5 for a while I think.

As for QE3, don't forget about the election cycle that re-commences this fall...

terriDeaner says

Eliza says

Not thinking too deeply into it, I would imagine that increasing fuel prices might increase housing prices near employment centers as people try to lock in a somewhat reasonable transportation cost.

Another interesting point. But at what geographical and temporal scales would this work?

Looks like 50 miles is enough to kill sales of new houses relative to foreclosures closer to a city center:

Builders of New Homes Seeing No Sign of Recovery
http://www.nytimes.com/2011/04/23/business/economy/23housing.html

RICHMOND, Ill. — In this distant Chicago suburb, a builder has finally found a way to persuade people to buy a new house: he throws in a car. [...]

Four out of 10 sales of existing homes are foreclosures or otherwise distressed properties. Builders like Mr. Meier who specialize in putting up entire neighborhoods on a city’s outskirts — Richmond is some 50 miles northwest of downtown Chicago — cannot compete despite chopping prices.

It would be nice if the car were a Toyota Prius.

Apparently its really a $17k credit for a GM vehicle but you can choose to put it towards the house instead. The Aveo apparently gets around 27MPG, which isn't bad but that is a really mediocre car to say the least.

zzyzzx says

Average MPG for only 20? Are people really that stupid?

How does this make someone stupid? Stupid is buying a new car just for a gas mileage advantage, unless you NEED a new car. I drive a 2002 vehicle that probably gets less than 25 mpg. I have not tracked mpg in a while so I'm not sure. Bought it used in 2003. It's paid for, runs great, quiet, reliable, body has one small door ding, and I like it. Cost of a new car far outweighs savings by increasing mpg. Oh, and driving an older vehicle makes my insurance cheap. Even if my mpg is 20, I don't think this is a stupid choice.

terriDeaner says

RICHMOND, Ill. — In this distant Chicago suburb, a builder has finally found a way to persuade people to buy a new house: he throws in a car. […]
Builders and analysts say a long-term shift in behavior seems to be under way. Instead of wanting the biggest and the newest, even if it requires a long commute, buyers now demand something smaller, cheaper and, thanks to $4-a-gallon gas, as close to their jobs as possible.

That's pretty funny. Richmond is pretty rural and isn't a big enough city to have that much employment. But it does have great highway access. Most people who live in that area commute a LONG way to work. I guess that's why the builder thinks a new car is a good incentive.

Payoff2011 says

Most people who live in that area commute a LONG way to work. I guess that’s why the builder thinks a new car is a good incentive.

100mi (round trip)/20 mpg = 5 gal per round trip
5 gal * $4/gal = $20 per round trip (US AVG)
$20 * 5 days/week = $100/week commuting

$100/week * 52 days/yr = $5200 per year spent on fuel alone.

Prius avg's around 40 mpg, I think, so commuting in one of those would cost $2700 per year. They cost more than $17K though...

Aveo avg is 27 mpg, so commuting in one of those would cost $3851 per year. You could probably get a base model for $17K or less.

Guess it would come down to maintenance costs. Those could add up fast for an older vehicle driven 100mi*5days/week*52weeks/yr (26,000 mi/yr).

terriDeaner,

Do you own a Prius? I do.

You can buy a whole lotta gasoline with the cost of replacing that friggin battery. For my model Prius, a service advisor showed me an invoice- $4000. That's for the older model Prius. Replacement cost for the battery in the newer model Prius is higher.

I got a Prius in 2000 because it was a gadget that I was fascinated with at the time, when it was an ugly weird car, a geeky gadget before it was cool to be a geek; before "Prius" became a A Cool and Hip Birkenstock-ish Whole-Food-ish "I'm Better Than You Because I Care About the Environment More Than You Do" Left Coast Elite Fashion Statement. With 100K miles on it now I probably saved about 1000 or so gallons of gasoline compared to a simpler small car. Most of that time when I saved those 1000 gallons, it was $2-ish gasoline, not $4-ish gasoline.

So I am skeptical that with an honest accrual of the replacement cost of the battery, that it even penciled out to pay for itself.

Another way to reduce one's gasoline cost by half or even two thirds is to carpool. But here in the Bay Area, it is not Hip, and it is not Cool, to carpool long distances. Casual carpooling over the Bay Bridge maybe, but not long distances.

A Prius is Hip and Cool, though.

No, I don't own a Prius Sybrib. I don't drive enough to make owning a hybrid cost-effective, and I was always wary of the replacement cost for the battery.

That said, I'd don't have strong feelings for or against buying a hybrid or carpooling. Or being cool, for that matter... although I always thought birkenstocks looked dorky.

Another way to reduce one’s gasoline cost by half or even two thirds is to carpool.

You can reduce gasoline costs by one hundred percent if you live near a train station and don't have an automobile. If you live so close that you don't even need the train, total transportation costs can be reduced to zero.

The Prius is great for someone who's going to have an automobile whether it's efficient or not, but the "buy a Prius for the environment" crowd really bothers me. If they really cared about the environment and about conserving energy, they wouldn't have a car at all.

The next car I buy will be a plug-in hybrid. Electricity is a lot cheaper than gasoline.

$1.40 worth of electricity will take you 40 miles.

$1.40 worth of gasoline will take you how far?

@bayview6

Is it really that much cheaper than gasoline?

Non-scientific, but interesting to see how the gas savers stack up....

http://mpgstickers.com/home.php

Or you could hypermile :)

Electricity is much cheaper than gas, but as more people plug in, electric prices will increase. Also, the car costs a lot.

Hybrids are mature technology. In San Francisco, cab drivers put 300K miles on Ford escapes, saving about $30,000 per car in fuel over a few years before having to retire the cars for legal reasons. They also probably saved abut 12 brake jobs, because of the regenerative braking, so add in another $6000 to $12000 in savings for that.

http://articles.latimes.com/2009/mar/30/local/me-green-cabs30

I think that the fear about battery replacement costs is mostly drummed up crap. Has any study come out showing the # of battery failures per miles driven or the percent of cars needing a battery change?

"Toyota says its out-of-warranty battery replacement rate is 0.003 percent on the second generation Prius that debuted in the 2004 model year. That equals about one out of 40,000 Priuses sold, says Toyota spokesman John Hanson."
http://www.newsweek.com/2008/05/26/assaulted-batteries.html

Here's another article about battery replacement.

http://www.hybridcars.com/economics/hidden-costs.html

How much SILVER is in those batteries?

schmitz_kris says

How much SILVER is in those batteries?

None apparently (wikipedia):

http://en.wikipedia.org/wiki/Toyota_Prius

Battery

A sealed 38-module nickel metal hydride (NiMH) battery pack providing 273.6 volts, 6.5 A·h capacity and weighing 53.3 kg (118 lb)[55] is supplied by Japan's Panasonic EV Energy Co. They are normally charged to 40–60% of maximum capacity to prolong battery life as well as provide a reserve for regenerative braking. Each battery pack uses 10–15 kg (22–33 lb) of lanthanum. As each electric motor in Prius also contains 1 kg (2 lb) of neodymium, the car is described as "the biggest user of rare earths of any object in the world."[56]

Ni metal hydride seems like a good choice because it should be lighter than lead-acid, but more robust (i.e., maintains charge over a longer lifetime) than a lighter Li battery.

YesYNot says

Hybrids are mature technology. In San Francisco, cab drivers put 300K miles on Ford escapes, saving about $30,000 per car in fuel over a few years before having to retire the cars for legal reasons. They also probably saved abut 12 brake jobs, because of the regenerative braking, so add in another $6000 to $12000 in savings for that.

I don't doubt that hybrids are a good choice for certain situations, particularly those applications that require a lot of driving. As a side note, someone who drives a regular car (without regenerative braking) could probably save a similar amount of $ by doing the work themselves. Some specialty tools are required, but the skillset needed to replacing disk or drum brakes is not out of the reach of the average person.

YesYNot says

I think that the fear about battery replacement costs is mostly drummed up crap. Has any study come out showing the # of battery failures per miles driven or the percent of cars needing a battery change?

“Toyota says its out-of-warranty battery replacement rate is 0.003 percent on the second generation Prius that debuted in the 2004 model year. That equals about one out of 40,000 Priuses sold, says Toyota spokesman John Hanson.”

Also from wikipedia:

http://en.wikipedia.org/wiki/Toyota_Prius

The Prius uses an all-electric A/C compressor for cooling, an industry first.[24] Combined with a smaller and lighter NiMH battery, the XW20 is more powerful and more efficient than the XW10.[25] In the U.S., the battery pack of 2004 and later models is warranted for 150,000 miles (240,000 km) or 10 years in states that have adopted the stricter California emissions control standards, and 100,000 miles (160,000 km) or 8 years elsewhere.[26][27] The warranty for hybrid components is 100,000 miles (160,000 km) or 8 years.[28] [this is at least correct for 2nd generation Priuses; I'm not sure the warranty is the same for newer models]

Seems like a pretty good deal unless you keep your car longer than 100-150K miles or 8-10 years.

I agree, that in some situations, a hybrid would be bad. High mileage city driving they are great. High mileage highway, maybe less so. Low mileage, any situation, maybe not so good of a deal.
Letting a reusable battery sit around idle is generally bad, too.

YesYNot says

battery replacement costs is mostly drummed up crap.

It is not crap.

When I was at Toyota getting service for something, I asked the service advisor if he knew "approximately" how much a replacement battery would cost for my 2001 Prius. He told me that as a matter of fact he was having one installed for someone that day. The paperwork was close at hand and he showed it to me: $4000. Replacement battery came with a ONE YEAR warranty. For $4000.

You can choose to not believe what I wrote, and to call it crap if you want to, but that is what happened.

Also, my battery had to be replaced in 2005 due to a recall. I think I only had one more year of warranty on it at the time (I think the 2001 Prius had a five year warranty on its battery.)

Toyota says the Prius has an out-of warranty battery replacement rate of 1% for 1st gen & 0.003% for 2nd gen. You have an anecdote that there was one with a dead battery in the shop. I believe your story, but there are just as many stories about how much lower the maintenance costs are on a hybrid. Any car can blow an engine & have a huge repair cost. The question is, how often does it happen.

By the way, I hardly drive enough to justify my own car, much less replacing a car with a new one. If I did drive a lot in the city, I'd look at a hybrid. If I drove a lot on the highway, I'd look at turbo diesels.