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Is a hybrid car really good for your wallet?

Billed as the hottest answer to surging gasoline prices, the hybrid car has emerged as the panacea in America’s car-fueled economic anguish. But with the price of gasoline rising to record levels, is a hybrid is really good news for your wallet?
A Honda Civic with manual transmission is $2,500 cheaper than a fuel-efficient Honda Civic Hybrid, shown here, yet it gets almost the same gas mileage.Honda / Wieck

Billed as the hottest answer to surging gasoline prices, the hybrid car has emerged as a panacea amid America’s automotive-fueled economic anguish. But with the price of gasoline rising to record levels, is a hybrid is really good news for your wallet?

Hybrids like the Toyota Prius or the Honda Insight are certainly among the most fuel-efficient cars now on American roads, clocking up some 40 or 50 miles to the gallon in some tests. And owning a hybrid vehicle also means you’re doing your part for the environment by reducing auto emissions. The vehicles, which run on a bifurcated system using an electric motor and a gasoline engine, significantly reduce smog-forming pollutants and carbon dioxide emissions.

But if you’re concerned about rising gas prices, it doesn’t necessarily follow that a hybrid car is your best bet, according Tom Appel, editor of "Consumer Guide: Automotive," a guide for car buyers. And with the price of retail gasoline surging to a record national average of $2.55 a gallon in the latest week, most consumers are likely thinking more of their financial health than the environment, he notes.

“People are buying hybrids because they like to think they are doing something for the environment, and generally if you burn less fuel you pollute less, but if your main motivation is to save money, the best way to go isn’t necessarily a hybrid,” Appel said.

Consumers who buy a hybrid car may buy less gas and have lower maintenance costs, but insurance costs can offset those savings, and hybrids generally cost more than conventional gasoline cars.

According to a recent study by automotive research Web site that compared the break-even point of owning and driving a number of popular hybrids against conventional gasoline models, hybrid owners would have to drive thousands of extra miles or pay steep prices for gasoline to make up for the additional cost of a hybrid in five years or less.

One exception is the Toyota Prius. Compared with the similarly-sized Toyota Camry LE, over the first five years of ownership the Camry is expected to cost its owner just $81 more than a Prius. estimated that the price of gasoline would have to cost at least $5.60 a gallon for hybrid drivers to break even if they drove 15,000 miles a year over the five years. But even though the cost of gasoline is now at about $2.50, car shoppers shouldn’t be too complacent according to Phil Reed, consumer advice editor at

“My feeling is anyone shopping for a car now should make the question of fuel economy a big issue because the availability of oil in the future is uncertain,” Reed said. “Don’t buy a car thinking it's acceptable today; one day it could be your hedge against high fuel costs.”

Consumers who want to save money at the gas pump would do well to carefully research their alternatives, notes Appel, as there are a number of smaller, fully gasoline-powered cars on the market that can be friendlier to a wallet squeezed by high gas prices.

A case in point is the Honda Civic Hybrid. While the Civic Hybrid managed a long-term vehicle average of 38.3 miles per gallon in Consumer Guide tests, a regular Honda Civic EX model with manual transmission, which is cheaper than the hybrid version, clocked up 32.5 miles per gallon — that’s excellent fuel economy, Appel notes.

“With a nearly $2,500 price difference between the two models, these figures show you’re not much better off with a hybrid,” Appel said. “Even if we had gasoline prices move up to $3 per gallon it would take a long time offset that price difference.”

Civic Hybrid drivers may also be short-changed when it comes to performance. While the Civic EX can get from 0 to 60 miles per hour in 9.4 seconds, the Hybrid only manages to get to 60 in 11.6 seconds said Appel. “It’s a serious lag; when you cross the 10 second line you cross the line between fun and practical,” he said. “The EX is fun to drive, but the hybrid certainly is not,” he added.

For some, hybrids may still be a cost-effective option. A hybrid car should pay for itself with significant fuel economy gains as long as it is kept for a number of years, analysts say, and can be thought of as an insurance against volatility in the gasoline market. But if a car owner is planning on leasing a hybrid for a few years, they are less likely to recoup the loss of their investment.

But hybrid owners could soon see some significant pay back for going green. According to a report by the not-for-profit American Council for an Energy Efficient Economy, buyers of hybrid vehicles are likely to receive tax breaks ranging from $250 to $3,150 as a result of the new federal energy bill recently signed into law by President Bush that encourages the use of fuel-efficient, low-emission vehicles.

The bill has some shortcomings, however. Credits for a manufacturer’s vehicles begin to diminish and eventually disappear once 60,000 of them are sold — a number that is a fraction of the roughly 17 million cars sold each year in the United States.

A cheaper alternative to gasoline powered cars are diesel-powered vehicles, which are gaining popularity in Europe where gas prices are high. But emission standards in a number of U.S. states prevent the wider adoption of these cars in the Unites States, says Phil Reed of A diesel hybrid is also likely in the future, he notes, and would be an attractive option for some car consumers.

Another way to save on gas prices is to drive less aggressively.

In a recent study, a Ford Mustang driven aggressively over a 55-mile loop — with sharp accelerations and hard braking — managed 18.1 miles to the gallon, while the same car driven over the same track with a more moderate driving style clocked up 23 miles to the gallon, a 27-percent improvement.

“The other big fuel saver is cruise control,” Reed said. “We got a 4.5-percent improvement in the Mustang just by using cruise control. So when you’re thinking of saving money on gas it pays to watch the way you drive and not be too aggressive.”