Don’t let rising gas prices push you into panic selling

Logically, the high cost of fuel doesn’t justify drastic lifestyle changes, says Randall Denley, so don’t be too quick to dump your SUV or your suburban home

The rising price of gasoline offers all of us an interesting logic test. What’s the right thing to do in response? Should we sell our big vehicles, give up our houses in the suburbs, or spend billions of dollars on a new transit system?

If you checked off none of the above, you’re on the right track.


There is no shortage of people claiming that they are about to give up their SUVs or minivans because gas prices have gone up. The Globe and Mail’s normally-sensible Margaret Wente says she’s dumping her SUV because it cost her $60 to fill up. That’s probably still less than a high-end Toronto columnist pays for a manicure, but she’s not alone in her thinking.

What these drivers apparently can’t figure out is that large vehicles can be costly, but it’s not primarily because of gasoline prices. The Canadian Automobile Association’s annual driving costs report offers some useful explanation of the real cost of motoring. The CAA measured the total annual ownership costs of a $20,000 Chev Cobalt and a $26,000 Chrysler minivan, both driven 18,000 kilometres a year. As you might expect, the minivan costs more to drive, but it’s not because of fuel consumption. The Cobalt costs $8,944.50 a year in total. The minivan is about $2,800 more but almost all of that is increased depreciation and financing costs on the more expensive vehicle.

There is a $531 differential in annual fuel costs between the two vehicles. If gasoline went up 10 cents a litre, it would cost the person with the minivan about $50 more a year than the same increase would cost the thrifty Cobalt driver.

So, the logical person wouldn’t trade in a large car for a small one, just because of gasoline prices. If you want cheaper transportation, buy a less expensive car. Improving fuel efficiency will save you very little. Driving less doesn’t matter that much either, because of the high fixed costs of owning a car. By cutting back to a mere 12,000 kilometres of driving, the minivan owner would shave only $700 off his annual driving bill.

Some predict that rising gasoline prices will contribute to “hollowing out” the suburbs, with empty-nest owners selling their large homes and moving closer to the centre. The high cost of commuting is said to be a key factor. American author James Kunstler has made a career of flogging this prediction and avid collectors of received wisdom are quick to agree with him.

But consider this: Statistics Canada reports that the average commute in Ottawa is 8.1 kilometres. The return trip costs the guy in the minivan $2.07 a day in fuel costs. You could quadruple the cost of gasoline and it still wouldn’t make sense to move just to get closer to work.

The Ottawa Citizen