Hybrid Cars and Gas Prices

According to auto industry executives, hybrid cars and diesel cars will jockey for market position as long as gas prices remain under $3. While gas prices hung around $3, interest towards hybrid and diesel cars grew because consumers had concerns about the costs of filling the tanks of conventional cars. Now that gas prices have dropped, the concern for stretching every gallon of gas has also fallen.

Consumers are not as drawn to hybrid vehicles and diesel cars because they have no reason to spend anywhere from a $3,000 to $10,000 premium on an alternative fuel car. For much of the next decade, gasoline-powered hybrids, diesel engines and cars that can run on blends of gasoline and ethanol will jockey for market position, executives said.

Hybrids save fuel by using an electric motor at times rather than the gasoline engine. Diesel fuel can cost more than gasoline but gets 20 percent to 40 percent better fuel efficiency, meaning you go farther on a gallon.

The auto web site, Edmunds.com, is now saying that some hybrid cars are worth their premium price tag due to higher gas costs and tax credits from the government. "High gas prices and generous tax credits now offset the high sales prices of some hybrids, assuming owners keep their hybrids for a few years," said Alex Rosten, an analyst with Edmunds.com. 30, the tax credit gets cut in half. The tax credit on Toyota and Lexus hybrids is scheduled to drop to 25 percent in April 2007 and then be eliminated in October 2007.

Summarized by WS