Four 'Myths' About Gasoline Prices

This week will probably reveal whether last week's big drop in oil prices was simply a head fake or the peak in prices that has caused motorist misery at the gas pump.

Whether prices come down a bit or simply head still higher, it's no secret that fuel prices are taking a bigger bite out of consumers' budgets.

"People can't avoid taking note of rising gas prices and that generates a lot of stress, both in thinking about the expense and in considering options to manage the situation," said Edmunds.com senior consumer advice editor Phil Reed. "But with all financial decisions, it's important to keep a level head to sidestep the misconceptions that may cost you even more money in the long run."

Myths

Reed and fellow Edmunds editors have come up with four “myths” about gas prices. The first is that rising gas prices are forcing families into bankruptcy. Simply not the case, Reed says.

Edmunds.com looked at a hypothetical household earning $50,000 a year with two cars: an around-town hauler (larger SUV) and a commuter car for getting to and from work - a smaller more fuel-efficient vehicle.

At $3.00 per gallon, annual fuel costs for this household comes to about seven percent of the total household income, or about $3,500. At $4.00 a gallon, that proportion moves up only slightly to 9 percent of the household income, or about $4,500.

"In short," said Reed, "if this family were to go bankrupt, steep gas prices would not be the main reason."

Small isn't always beautiful

Myth number two is that trading in an SUV for a hybrid will save a lot of money. Edmunds.com calls this a knee-jerk reaction that often proves to be a financial misstep. For example, if your SUV has a $10,000 trade-in value while your new hybrid costs $25,000, it could take over eight years to make up the $15,000 balance in gas savings.

 Some numbers don't add up

Myth number three; if 25 mpg is good, 50 mpg is twice as good. Comparing miles per gallon (mpg) measurements alone doesn't always show a clear picture of how much fuel you actually save.

Assume three cars of different fuel efficiencies travel 100 miles: the 12.5 mpg car uses eight gallons of fuel, the 25 mpg car uses four gallons of fuel and the 50 mpg car uses two gallons. So switching from the 12.5 mpg car to the 25 mpg car saves four gallons of fuel, but switching from the 25 mpg car to the 50 mpg car saves only two gallons of fuel for that 100-mile trip. Therefore, it makes more sense to trade a car with low fuel efficiency for a car with moderate fuel efficiency than it does to trade a car with moderate efficiency for a car with high fuel efficiency.

Early morning fill-up

Finally, a lot of consumers have been told that buying gas in the early morning will save you money. It is true that colder gasoline is denser and expands as temperatures rise. So, in theory, you would get more energy-dense gasoline in the morning than you would in the afternoon.

But since gas is stored in well-insulated underground fuel tanks, its temperature isn't affected by the time of day.

The automotive website reports drivers can maximize their fuel-related savings by keeping better records of fuel consumption and automotive costs, toning down aggressive driving behavior and using the car's cruise control features.