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THE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & LifestyleTHE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & Lifestyle



Don’t Go Green: The Tough Decision Between Hybrid and Gas Powered Cars

Global warming exists. The more fossil fuels we use the more our ozone disintegrates. We must start imposing stricter environmental policies in an attempt to curb carbon emissions. These are all facts.

On November 17, gas prices had dropped to $1.9...

On November 17, gas prices had dropped to $1.99 in Bakersfield, California, due to falling Oil prices (Photo credit: Wikipedia)

Another fact? Gas prices are incredibly low. A product of such is that people that once bought hybrid cars are returning to combustion engine vehicles. According to a study by, 55 percent of hybrid car owners now decide to return to gas-powered vehicles, the lowest retention rate since the statistic was measured in 2011.

The tough decision between hybrid and gas powered cars will continue to be a cost-benefit analysis.

The costs are simple and numerous.

The first cost is the price of gas. Extremely volatile, the price of gas dropped dramatically after OPEC changed its policy to reclaim part of the market share it was losing to the American shale industry. Yesterday, a Saudi official dubbed the policy shift a great success, as the drop in gas prices have caused for increased demand for OPEC oil. Producing a record 10.3 million barrels per day, Saudis are unlikely to change their cost cutting policy any time soon.

This means that gas will continue to hover around $60 per barrel, a little less than half of what a barrel was trading for at this point last year. Therefore, prices at the pumps will remain low, incentivizing more people to buy gas powered vehicles.

Additionally, the price of hybrid cars, even with government subsidies, is rather high. Despite saving money on gas (which is cheaper now), the batteries in hybrids tend to have exorbitantly high costs (for maintenance and replacement). With gas prices as low as they are now it is extremely hard to consider a hybrid car cost efficient.

With gas powered vehicles costing less, the benefits also tilt firmly in favor of combustion engines. Hybrid cars prioritize fuel efficiency over power and torque. As a product, there is simply less utility from hybrid cars . Additionally, many families cannot buy hybrid cars because such cars are not offered in large models.

Many are marking this movement as a fad. Oil prices have already started to rise. With a low water mark around $47 in mid March, the price is already back up to $59. OPEC caused a scare, but its apparent that many have remembered Oil is a finite resource. The shock factor has worn off and Oil has started to return to its true value.

Keeping this in mind, automakers have not shied away from the market despite declining sales and customer retention rates. They still see hybrids as the future of the auto industry, and with such an assumption, their goal has been to give these models more utility.

The strategy is two-fold. The government grants hybrid car subsidies in excess of $7,000 to allow for price point competition with gas engine competitors. The next step is for car companies to make these vehicles more competitive in terms of utility, that is, make them more appealing to the general public.

Many people also see a moral argument embedded in the dilemma. To stop global warming, people must individually act in the best interest of the environment as a whole because it affects every touch of life, on an individual and universal level.

Hybrid consumers tend to take a rather aggravating moral high ground on the matter despite the fact that fuel efficiency is increasing in almost all cars, regardless of its fuel. S.U.V.s are becoming more fuel efficient, with some models topping 35mpg. With minuscule disparities in fuel efficiency, the moral argument is also losing ground as the emissions differences of cars while in operation are marginal at best, and after use, batteries from these hybrid cars are toxic and take a great deal of energy to dispose of.

So, acting under the broad economic assumption that individuals are self-interested, there is clear reason to not go green right now. However, a reinvigorated market for hybrids is not far away.

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