Reformulated Gas, Improving the Environment or Waste of Money?

In the US Midwest, gasoline was required to be reformulated, based on regions and their air quality conditions, under the 1995 Federal Clean Air Act. "Boutique blends" were created with the purpose of reducing ozone. Understandably, any time a standard product is customized, it increases its cost, and with these boutique blends are definitely more expensive, $0.14 more per gallon to be precise.

The Milwaukee Journal Standard posted an article on June 30 titled, "Some experts question benefits of reformulated gas, Wisconsin asks EPA to eliminate special fuel requirement," detailing the local experience with these blends.

The first point of the article is that the EPA hasn't been able to measure the effect of the reformulated gas as several other factors have changed. Automobiles now have better emissions systems, making them ULEV (ultra-low emission vehicles), as well as cleaner burning, non-formulated gasoline. As US fuel standards become more strict, the value of reformulated gasoline declines.

It should be clear to any consumer, as well as government regulators that with sweeping changes, cost-benefit analysis needs to be performed to insure the highest benefits are achieved at the least cost.

US Representative Paul Ryan (R-Janesville), says it best:

"Wisconsin is being needlessly penalized, ... Reformulated gas is an economic burden on motorists because a limited number of refiners are producing it and it's only being sold in specific markets, ... The current system basically sets up a system for high prices," Ryan said. From Green Bay to St. Louis, there are five different blends of fuels. That makes absolutely no sense.'"

Hybrids, the Real Deal or Flavor of the Month?

Gas is about $4.00 a gallon where I live, almost twice what it was a year ago. So what? If you are considering a hybrid, it is a pretty big so what. When I was considering the costs and benefits of hybrids a year ago, I came to the reasoned conclusion that there was little economic benefit to be had. The clear reason was that cost savings from using less fuel didn't cover the acquisition cost. Most hybrids tend to several thousand dollars more than their non-hybrid siblings.

The US government, as well as many state governments, decided they should lavish hybrid owners and manufacturers with tax payer money (a.k.a. subsidies), as well as certain privileges, such as driving in HOV lanes without other passengers. They did this to encourage the technology, ostensibly to reduce emissions as well as dependence on foreign oil. Arguably, those may be noble goals, but the number of potential vehicles wouldn't make a dent in either of the issues. ULEV (Ultra-low Emission Vehicles) are able to reduce vehicle emissions without having to worry about recycling or producing expensive battery packs needed for hybrids. Additionally, there are several models of inexpensive gasoline-powered cars that get similar mileage for less money, not to mention diesel-powered vehicles.

Back to the question at hand, will a hybrid save its owner enough money to justify the premium price? The answer is found by using a simple formula. Take the fuel economy of a non-hybrid and multiply by the average number of miles per tank to get price per mile. Do the same thing with the hybrid. Subtract the two results. Take the difference and multiply by tanks per year. So, if one saves $500 a year, and its a 5 year loan, the owner saves $2500 over the life of the car. Is that amount greater than or less than the premium to by the hybrid? That answer will determine generally whether owning a hybrid makes sense from an economic point of view. $4.00 gasoline has really changed the outcome of that equation, making them more attractive. I tell you what I am waiting for though, hydraulic diesel hybrids, as they don't require batteries to store power. UPS is running a pilot now. Details can be found here.

Don't forget to use the MPG calculator at http://www.fueleconomy.gov/feg/savemoney.shtml