Americans pouring tax cut savings into gas tanks

pump-gas-nozzleeditors-blog-entry3If you’ve been following the news lately, you might have noticed a slew of stories focused on how consumer spending is up in the U.S. and how much of this increase is due to higher gas prices.

For instance, the Associated Press (AP) began a recent story about gas costs devouring the savings of lower taxes with the following lead:

“Americans are earning and spending more, but a lot of the extra money is going down their gas tanks. Gas prices have drained more than half the extra cash Americans are getting this year from a cut in Social Security taxes.”

And, if you’re thinking, “Well, at least that money is growing the American economy,” you’re wrong.

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More from the same AP story:

“Unlike some other kinds of spending, paying more for gas doesn’t help the U.S. economy much. Much of the money goes abroad…”

Higher gas prices, less money for U.S. economy
So, let’s see. Here’s what a gasoline car gets you these days: Higher gas prices, less money for you and less money for the American economy.

Maybe that’s what you’re into. After all, there are plenty of anti-plug-in vehicle folks out there who apparently love to fork over money to Big Oil and to Foreign Oil, all the while having less money for themselves, not to mention the American economy.

leaf-ugly-frontIn fact, a lot of these folks – you can find them in virtually any comments stream below an online article about electric cars — claim to be the most patriotic Americans ever.

And, who knows, maybe they are.

Of course, I sure can’t figure out what’s so patriotic about paying more at the pump, sending a lot of that money overseas, and being constantly held hostage to oil prices, although maybe the “sacrifice” thing makes this all “patriotic” — even if this sacrifice is rather backward in this case.

A better way
In any case, there is a better, less frustrating way, a way to escape being held hostage to wildly fluctuating, and, for now at least, rapidly rising gas prices – in some parts of California, gasoline, now at $4 per gallon, is a full $1 a gallon more than it was one year ago, a whopping 33 percent increase for those of you interested in the math.

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That better way: Go out and get yourself a plug-in vehicle such as a Nissan LEAF or a Chevy Volt.

Yes, they’ll cost you more up front than a gasoline car, although in some places your after Federal tax credit and state tax credit costs for a LEAF could be less than $20,000, or $5,000 less than the price of a Honda Accord. But chances are you’ll save money in the long run (see table below). And, of course, you’ll get the satisfaction of saying goodbye to that feeling of being held hostage to something essentially completely beyond your control: Rising oil prices.

Doing the math: EV vs. ICE, one example
Nissan LEAF vs. Nissan Versa

It’s important to note that the estimate below looks solely at fueling cost differentials and does not include potentially significant savings the LEAF might offer in terms of lower maintenance costs. Nor does it account for rising gasoline or electricity prices over time. Finally, it’s important to note that we picked the bottom-of-the-line, bare-bones Versa as a comparison vehicle.

Nissan LEAF (base model)

Nissan Versa (1.6 liter, 5-speed manual base model)

Purchase Cost

MSRP $32,780
– $7,500 federal tax credit
– $6,000 Colorado tax credit
= $19,280

MSRP $11,170

Annual fueling costs /15,000 miles per year, 10 years

$4,710 –>$471 x 10 years

( $.11 per kWh, 3.5 miles per kWh)

$17,000 –>$1,700 x 10 years

($3.40 per gallon, 30 mpg)

Purchase cost + 10 years of fueling =



Total comparative costs

+ $4,180

– 4,180

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