Which Fuel Option is Best? Diesel? Flex Fuel? Electric?

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Have you ever thought about buying a different car so that you could save money on gas? I sure have! My latest wish was “to have a car that could run on flex fuel so that I could spend less than $2.00 for a gallon of gas!” But, would this truly be the best option? What about electric? What about diesel? And what about good ol’ gasoline? Which fuel option is best? I was so curious that I figured I may as well write an article to educate others as I learn about these different options myself!

Flex Fuel (E85)

I knew flex fuel was made from corn and that it was cheap, but that was pretty much the extent of my knowledge on this new fuel option. It turns out that it’s called E85 because it is made from 85% ethanol and only 15% gasoline. It is considered a more green option because the majority of the fuel is generated from plants, and not from finite resources such as crude oil.

how-e85-ethanol-flex-fuel-works-6

 

So what is the fuel efficiency of this flex fuel? This is a question I didn’t ask myself until recently and luckily I thought about it before I went out and purchased a car just for the flex fuel option because apparently it’s terrible! Here are the facts in quick bullet-point form:

  • Edmonds performed a fuel efficiency test with a flex fuel Tahoe
  • Cost of gasoline (at the time of the test): $3.42
  • Cost of flex fuel (at the time of the test): $3.09
  • MPGs with gasoline: 18.3 mpg
  • MPGs with flex fuel: 13.5 mpg
  • On a per trip basis, flex fuel was actually 24% more expensive!

In the end, flex fuel is more costly to use, but it is better for the environment and the economy (as it requires more farm hands domestically to produce). If you want to promote a better environment, then flex fuel is for you. If you are simply looking to save money, then it is certainly not!

Diesel Fuel

20141207 - dieselDiesel fuel has been around for a while, but it is still an alternative to gasoline. Here are the pros and cons to diesel fuel according to Dummies.com:

Pros of a Diesel Car

  • Great gas mileage – Diesel vehicles get 25% better fuel efficiency than gasoline
  • They typically last longer – Because of the way they’re built, they typically live much longer than cars that run on gasoline

Cons of a Diesel Car

  • They are often more expensive to buy (because of the better fuel economy and the longevity of the vehicle)
  • Diesel fuel is more costly – At this moment, the cost of regular unleaded gasoline is $2.49 and diesel is $3.79. Ouch!

I am so glad that I am not running a car on diesel right now! With pump prices 52% more than gasoline, there is absolutely no way that diesel cars are running at a lower cost overall. If the prices were equal, then diesel would likely win the overall cost battle. Even if diesel fuel was 20% more than gasoline, it would probably still come out ahead. With the current prices though, diesel is not the best option.

20141207 - electricElectric Fuel

I actually didn’t know this until recently (I’m learning so much by writing this post! :)), but the cost of electricity can vary by state and also by the time of day. For example, in some areas the cost of electricity might be cheap during the day, but more expensive at night. When considering the cost of electricity by state, Washington offers the cheapest rate of 8.6 cents per kilowatt hour and Hawaii is the most expensive with a rate of 37 cents per kilowatt hour. If this means nothing to you (which I wouldn’t expect it to), it basically means that you can run a Nissan Leaf for $25 per 1,000 miles in Washington, but have to shell out $107 per 1,000 miles in Hawaii.

On average, it costs about $3.68 to drive 100 miles in an electric car.

The obvious benefit of an electric car is the decreased cost, and surprisingly enough, the maintenance costs of electric vehicles are cheaper than a gasoline powered car. But, there is the matter of the battery, which can cost $2,500 or more to replace every 10 years or so.

Perhaps the greatest con of an electric car (besides the big price tag initially) is the distance you can travel per “fill-up”. At this moment, the farthest distance you can travel in an electric car is about 100 miles, and charging your car takes time as well, so travelling across the country is pretty much out of the question. But, if you simply need a vehicle to drive around town, then perhaps this option makes sense for you.

Hybrid – Gas/Electric

20141207 - priusOkay, so if electric cars aren’t practical, then what about a hybrid vehicle? One of the very first mainstream hybrids was the Toyota Prius. This car runs on battery power as long as it’s charged, and will then switch over to gasoline when there is no longer battery power. On average, these vehicles get about 50 miles per gallon, which is awesome, but there are cons as well.

Cons of a Hybrid Vehicle

  • Initial cost – these vehicles are often thousands of dollars more to buy than a car that runs off only gasoline
  • Cost of repair – hybrids have all the components of a regular vehicle, but also have the battery elements. This means increased maintenance costs when your car breaks down.

Overall, the hybrid is a tempting option, but if you plan to own it for many years, it appears that the cost savings will soon be depleted by the cost of repairs. It might be the best option if you like to buy newer cars that are under warranty, but if you like to buy cheap 10-year-old vehicles then you probably want to steer clear of hybrids.

Gasoline

And now it’s time for good ol’ gasoline! As I stated before, the current price of gasoline in my area is $2.49 (I love it!!!). Here are the pros and cons as I see them:

Pros of gasoline

  • Relatively cheap fuel source
  • Readily available everywhere
  • Easy and quick to fill up
  • Cheap to fix cars that run on gasoline because it is the norm

Cons of gasoline

  • Using up a depleting resource
  • May cost more than electric cars or flex fuel per fill-up
  • Harms our environment when used

Summary of Findings

So what did I learn from my exploration? Here is my run-down:

  • Flex fuel is cheap per gallon, but costs more to run because of terrible fuel efficiency
  • Diesel fuel costs way more per gallon, but does run more efficiently for better gas mileage. However, with the high costs of diesel right now, it still costs more than gasoline overall
  • Electric cars are cheaper to run, but you cannot drive them a great distance. Plus the charge up stations are still few and far between, not to mention that a fill-up can take hours to get a full charge again.
  • Hybrids are a great option and get much better gas mileage, but the repairs can be quite costly.
  • Gasoline is cheaper than ever right now. It is readily available and is an easy fill-up for your car.

For me, I am still a big fan of gasoline. Maintenance and repairs on my Honda cost very little and the gas mileage is pretty decent (33+ mpg). Plus, the purchase price of a gasoline powered vehicle is often much cheaper than the alternative fuel vehicles. For me, I still choose gasoline!

What about you? What fuel option is best for you?

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Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

3 Comments

  1. I’d love to go with an electric car, but the price just doesn’t make sense right now. Once you can start building an electric car that can travel more than 100 miles between charges and costs a reasonable amount, they just don’t make sense for me. Hopefully as the technology improves, the prices will come down.
    Jon @ Money Smart Guides recently posted..16 Habits of Wealthy People

    • I’m with you Jon. Electric would be an awesome option, but with the high initial price and with the limited distance it can travel, it just doesn’t make sense for me either. I’m definitely going to keep watching it though!

  2. I hadn’t thought about how electric cars could be better in some states than in others. Which is probably why more people from certain states know about them/have one, compared to other states which have none and others just don’t even know about them. My uncle owns one, and he finds that it’s more than worth it here.


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