Sunday, June 13, 2004

No Guzzle, No Glory

From the Washington Post. David Greene is quoted as saying:

"People do care somewhat [about gas prices], but there are two fundamental things that have happened" since the early '80s, he said. "Number one is, people have become wealthier, and the more money they have, the less they care about the price of gasoline. Number two, for new passenger cars, we've already almost doubled our fuel economy since 1975. That makes the fuel component a much smaller part of owning a car."

I am looking for data to show the first statement is true. I heard somewhere that average household income of a family that buys a new vehicle is of the order of $ 80,000 per annum. For these folks, gasoline may be less of a cost factor.

As for the cost of gasoline, AAA calculates that while total costs of driving for various types of vehicles varies from 50 to 70 cents per mile, gas and oil contribute to only about 5 to 6 cents of this cost. This is less than 10% of the driving costs. Much of the costs are really embedded in the depreciation of the vehicle.


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