[I_Like_Plants]

$this->bbcode_second_pass_quote('billp', '
')


Keeping old cars that get good mileage can be entertaining ... and time consuming.

Senior citizen, who also weathered the 1972/3 gas crunch with White ford, is a bit concerned that we may soon see gas shortages or even rationing.

If what I read at Peak Oil and The Oil Drum is correct.

[perdition79]

Scarcity will be the issue with gasoline, not price. I figured out that on my meager wages, I can afford to do my normal 240 miles of driving every week until prices hit $10 a gallon. (And that's without having to resort to the most horrible of automotive fates: carpooling.) I'm not sure how high the price of a barrel of oil would have to be for gas to cost $10 a gallon, but by the time we're that screwed, who would be willing to sell it??

I say get whatever vehicle you want. Get the biggest, loudest V8 you can find, strap a nice Holley 650 4-barrel to it and head for the highway. Enjoy your next car as though it will be your last, because it probably will be.

[smallpoxgirl]

$this->bbcode_second_pass_quote('perdition79', 'S')carcity will be the issue with gasoline, not price.

[perdition79]

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('perdition79', 'S')carcity will be the issue with gasoline, not price.

[emersonbiggins]

As long as my credit limit keeps getting increased, I can 'afford' to drive to work.

WARNING: I speak for millions of Americans.

[gg3]

Yo Mefistofiles-

The risk you're courting right now is one I've seen among a number of people who have significant wealth consisting of a) a high-paying job that's apparently secure plus b) one or two expensive houses in which they have substantial equity.

The risk is to believe that just because you can afford to pay the cost of meeting any challenge that has arisen in your life while wealthy, that this situation will continue into the future. This is a mindset, a way of thinking that becomes pervasive.

The thing that creates that mindset, and the resulting risk, is the predictability of one's earnings and equity under those conditions (a + b above).

The biggest risk is that your job may go away with little notice, and real estate might tank. The latter is apparently happening as we speak. Put the two together and you might end up in an entirely new situation with little of the kind of experience it takes to weather that kind of storm.

Those I know whose wealth has come through rough and tough competitive business activity tend to be a heck of a lot more conservative about it. Their experience has been one in which income and earnings and equity have not been regular, linear, or predictable. In the boom times they earned fortunes, and in the bad times they lost big chunks, and over time they accumulated what they have. The non-regularity of their income etc. have bred in them a sense of frugality even in good times because they know darn well that bad times will come and they will have to protect their gains and minimize their losses.

This has not led to a life of self-deprivation; far from it; the folks in the latter group have certainly managed to buy some cool toys and have some good times. But they make their decisions in a spirit of prudence and with a conservative outlook.

The opportunity cost of the less efficient vehicle isn't just $6k a year in gasoline. When bad times come, as they surely will, fuel may be difficult to obtain at any cost (rationing), so the more efficient vehicle translates to greater freedom of movement. As fuel prices go, other prices follow, to the point where that $6k a year may in fact become significant. The other part of the opportunity cost has to do with preparedness: money saved on fuel can offset the cost of other preparedness measures such as having a place in the country and the capability to become more self-sufficient as that need arises (and most of us here believe it will).

So my suggestion is, get the more efficient vehicle, it's still plenty comfortable. "Party like you're gonna' die" is bad advice that becomes a self-fulfilling prophesy for the individual as well as for the society as a whole. Plan ahead and live to tell the tale.

On the other hand, if $6k is disposable income for you, then go here: www.thefosl.org and consider writing a tax-deductible check toward our efforts. Or if not us, then someone else, as there are a few other groups around who also have the talent to make it go.

And if you don't need the tax deduction, then send the $6k to The_Toecutter on this board, who is a poor college kid but an absolute genius in the same league as Bucky Fuller, presently designing & building electric vehicles and wind turbines. And yeah, I'm 100% serious about this. (Or if you want to support his efforts but get the tax deduction, we can arrange that via FOSL.)

---

About what happens when people who have it all, lose it all:

Back in the days of the dotcom boom I knew a lot of geeks who took pride in being social darwinists. After the dotcom crash they became darwinized socialists. They suddenly discovered that becoming poor was not a moral failing, it was largely a matter of sheer luck.

They had worked their asses off, earned their fair share and then some, and enjoyed the kinds of luxuries that geeks enjoy ("Dude! come on over, I just bought a Sun!") (back in the days when such things cost as much as cars). They managed their affairs with reasonable foresight and intelligence.

And then through no fault of their own, the bottom fell out.

I saw, twice or perhaps three times, an interesting combination on the road. A fine automobile pulling a run-down camping trailer. The license plates on the former were "vanity plates" spelling out some word that geeks and coders knew as inside jargon.

I was puzzled at first, but then figured it out: Caught in the crash, faced with the choice of making the house payments or the car payments, they let the house go, kept the car, and bought the trailer. To live in. And follow the jobs wherever jobs were available. This is called being a refugee.

You don't want to become a refugee. Refugees are people whose existence is barely tolerated due to whatever remnants of conscience exist in the places that tolerate them. They are regarded as a drain on the resource base wherever they go. They are not treated as people who have rights. They are not treated as free people. This is an outcome that can be avoided.

[IslandCrow]

BUMP

Some years back I did the sums on a hybrid car for my own use, and there was no doubt about not being able to afford it (the situation is really bad in Finland because of the high rate of tax on new cars).

However, the following article indicates that there is a place for hybrids (as TAXIS)

BBC: NY Taxis go Hybrid

$this->bbcode_second_pass_quote('', 'N')ew York's yellow taxis will go hybrid in five years, in an effort to cut air pollution and tackle climate change,....

The new vehicles are to be phased in immediately, replacing the current fleet which numbers about 13,000.....

Currently the city's taxis get about 14 miles per gallon on average, while the new fleet would provide fuel efficiency of about 30 miles per gallon.

"Implementing tougher standards for the more than 13,000 taxis in this city will provide the same clean air benefits as removing 32,000 privately owned cars from our streets," Mr Bloomberg said.

Hybrid vehicles are more costly, but the City Council said the increase in fuel efficiency will save taxi drivers more than $10,000 (£5,000) every year.

[pup55]

The thread about using hedging to counteract PO got me thinking, so I have been working on a scenario, the most extreme possible:

Let's say you want to buy a car, and have the following two choices: The first, a 1998 Ford Explorer, with 150,000 miles on it. In my area, you can get one of these for about $5000, and it will get about 12 mpg in the city. This is one of the most legendary POS vehicles of all time. It was the subject of the infamous rollover recall, and subsequent lawsuits. These vehicles are widely acclaimed to be death traps.

The second, a 2007 Prius. $26,000 drive off price, and 34 mpg in the city. Everyone loves them.

If you drive 10,000 miles per year, that's 833 gallons per year for the Explorer, and 294 for the Prius, per year.

So theorectically over the next 5 years, given a constant fuel price of $3.25, you would pay about $13,400 for the fuel for the Explorer, and only about $4800 for the prius, so the net of all of that still favors the explorer by a lot. The initial $5K purchase price plus the fuel cost gives you $18,500 in cost, the total for the Prius would be $31K.

But you have to figure that after 5 years, the Explorer will be marginally functioning, and the Prius will still be going strong. So figure a $1000 salvage value for the truck, with 200,000 miles on it, and a $15,000 salvage value for the Prius with 50K miles on it,

In this case, the Prius does a little better. Net cost is about $17,500 for the truck, versus $16,100 for the Prius.

But, the next question is, if you bought the Explorer, what did you do with the remaining $21,300 that you had left over since you did not buy the Prius?

We had some fun in the other thread with this mutual fund:

FSENX

In the past five months, the price of fuel has gone up by 39%, and the return (including dividends) on FSENX has been 16%.

If you invest the $21,300 in this fund, and the price of the fund goes up at the same proportion as the increase in the fuel price as it did in the last five months, what happens to your net worth?

The answer is: If the fuel price goes up "zero" and the mutual fund goes up "zero" you are a little better off buying the Prius after five years. You own a $1000 piece of junk, you paid out $13,500 for gas, but you still have your $21,300 investment for a net of $8758

If you bought the Prius, you have a $15,000 prius, you paid out $4800 in gas, so the net of that is about $10,200.

But, we think, being peak oilers, that the price of gas will go up over the next five years. If the gas price goes up, the investment goes up by some amount.

Let's be optimistic and say that the average fuel price will only increase 10% per year over the next five years. In this case, the investment will increase 17% total over the next five years, offsetting both the increased fuel cost and the salvage value difference, and you will be ahead if you bought the explorer: You will have the $1000 piece of junk, you will have paid out $16,535 in gas, but you will still have the $21,300 left over from the original transaction, plus you will have made about $4000 on your investment for a net of $9750 give or take. In the Prius case, you have the $15,000 Prius, you paid out only $5800 in gas, but you do not have the investment income. Your net is only $9200, give or take

Stupidly, the higher the price of gas goes, the more sense it makes to buy the Explorer, as long as you invest the leftover money in some way to take advantage of an increasing oil price. The breakeven amount of fuel increase is about 7.4%. If you think fuel will go up this much or more, buy the explorer, but be sure to make the mutual fund investment. This rate of increase will lead to a $4.32 unleaded price in 5 years, but you fatten up on the investment so much that even if gas doubles every year, giving us $16 per gallon in five years, you are still better off than if you had bought the Prius.

By the way, none of this obviously includes such stuff as repairs, to either the Prius or the Explorer (the Explorer will need a new transmission and the Prius will have to have a new set of batteries). Also no insurance, preferential tax treatment, or other stuff. Also, no taxes on your investment. Hopefully the IRS will be dysfunctional in a world of $16 per gallon gas, so they will not come after their money.

Also, we are making a big assumption about the rate of return of the fund.

All I am saying is, that you have to look at the initial cost of the vehicle, the salvage value, the operating costs, and most importantly, what you do with the money you do not spend on the Prius in order to make a decision that maximizes your net worth.

Some people naturally think like this. Other people just say: Get a good bike at a garage sale and do not worry about it.

[SchroedingersCat]

This is where the actions of the individual make no difference. It's the actions of the herd that matter. If you live in the U.S., you consume about 25 barrels of oil per year, on average. If oil goes up by $10 per barrel, you pay an extra $250 per year. If oil goes up by $100 per barrel, you pay an extra $2,500 per year.

There is no financial interest to the average consumer to do anything to reduce their consumption of oil. At $150 per barrel, maybe. At $70 -- not a chance. Anything you do other than reduce your standard of living will cost you money.

How many will voluntarily reduce their standard of living to save $250 per year? $500 per year? $1000 per year?

[NoLogos]

$this->bbcode_second_pass_quote('SchroedingersCat', 'T')his is where the actions of the individual make no difference. It's the actions of the herd that matter.

[dinopello]

$this->bbcode_second_pass_quote('SchroedingersCat', 'H')ow many will voluntarily reduce their standard of living to save $250 per year? $500 per year? $1000 per year?

[mgibbons19]

$this->bbcode_second_pass_quote('IslandCrow', 'h')ybrids (as TAXIS)

BBC: NY Taxis go Hybrid

$this->bbcode_second_pass_quote('', 'N')ew York's yellow taxis will go hybrid in five years, in an effort to cut air pollution and tackle climate change,....

The new vehicles are to be phased in immediately, replacing the current fleet which numbers about 13,000.....

Currently the city's taxis get about 14 miles per gallon on average, while the new fleet would provide fuel efficiency of about 30 miles per gallon.

"Implementing tougher standards for the more than 13,000 taxis in this city will provide the same clean air benefits as removing 32,000 privately owned cars from our streets," Mr Bloomberg said.

Hybrid vehicles are more costly, but the City Council said the increase in fuel efficiency will save taxi drivers more than $10,000 (£5,000) every year.