Monday, April 28, 2008

Cars vs. Gas Prices

So, I was over at http://www.fool.com/ trolling for stock pitches by people with terrible CAPS scores; macheting through the dense message-board undergrowth in the internet forest I came upon a clearing within which stood a little sapling of knowledge, happily growing next to a stream of burbling factoids. My curiousity piqued, I knelt next to the flow. I scooped out a handful of water, and with it came a little creature. A reply! It said:

"You're being unfair saying that Hybrids have been in this market nearly 10 years. The introduction of the Honda Insight hardly qualified. A car that never sold more then 500 units.With all the excuses you have for Ford, you still don't address that Hybrid or not, they have the least effecient fleet in the industry, and gas prices are going to hit $4 this Spring. Ford's average vehicle returns 18 mpg. Compare that to Toyota at 23.5 mpg's."

To which I responded (Bearing in mind that I'm not the person, nor will I ever be, defending Ford in the conversation):

"Gas Prices, April of each year: (YoY % Change)
2004: 1.77
2005: 2.25 (27%)
2006: 2.76 (23%)
2007: 2.82 (2%)
2008: 3.47 (23%)

Let's predict Apr 2009 gas prices. Simple model: assume YoY prices increase linearly throughout the year (this is perhaps a slightly implausible scenario since from glancing at the data it looks like the curve is steep at the beginning of year and flattens over the summer months, though it look like does steepen again over autumn months). Jan 08 gas price starts at: 3.08. Thus over first four months of the year: .38 increase.

Predicted 2009: 3.96
40% YoY increase.

Difference between average MPG of Ford and Toyota:
(23.5 - 18) / 18 = 31%

'Nuff Said."

(cite: http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_history.html)

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