Newsflash: Lutz is in the pocket of Big Oil


I try not to be too ‘environmental’ here too often so I will consider this an economics post. Plus this one really got me going:The US according to Lutz: ethanol, yes, diesels, not so much – Autoblog

In that case, Lutz’s opinion is that just about all the customer will glean from an oilburner is a higher car payment.

He goes on to say that Ethanol will end up being a much better option for most consumers.  Maybe for consumers that didn’t pass forth grade math!  It’s pretty simple:

  • Say a diesel car does cost $1K more than a equivalent gas/ethanol burner.
  • Assume also that the average car is financed for 48 months, so at on an 8% loan, that’s an extra $24.41 per month on the payment side.
  • Now let’s assume that th average American drives 300 miles per week, that’s roughly 1200 miles per month.
  • So let’s get today’s national average prices for E85 and Diesel:
    • E85: $2.43 per gallon
    • Diesel: $3.373 per gallon

    Hmm…starting to look pretty bad for diesel…and this may be were Lutz is right.  May consumers may stop once they realize their payment and each fill-up will be more on diesel.

But here’s what they don’t think about:

  • According to this article Dorothy Mills trailer , average MPG from E85 is 20-25% lower than a gasoline version of a similar vehicle.  According to the EPA site

    , the mileage on a diesel car is 31% higher than a similar gasoline car (38 MPG vs. 29 MPG for a 2006 automatic VW Jetta).

  • Now if we use the current CAFE standard MPG rating (27.5 MPG) as a baseline, that means the average E85 based car gets 20.6 MPG and the average diesel gets 35.8 MPG.
  • Therefore the E85 car would need 58.3 gallons of fuel per month at a cost of $141.55

    and the diesel would need 33.5 gallons of fuel per month at a cost of $113.06.

  • There is a monthly savings of $28.49 on fuel, and a net savings of $4.08 even after the extra monthly payment is figured in.

What’s so hard about that math Bob?






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