Tuesday, August 27, 2013

How Much More Money Would You Have if the Open Fuel Standard Passes?

How much would the average American family save if the Open Fuel Standard bill passes into law? Kelly Cook, the National Field Director for ACT! for America, has done the following calculations:

The price of gasoline and diesel has dropped 40 to 50 cents since those figures were used from the $4.00 level.

I’ve just used the following math, which is pretty indisputable and it would be instructive to your readers to follow the math...their potential savings.

The auto experts I’ve been seeing all seem to come in around the 12,000 to 15,000 average miles per year per car and/or pickup in the U.S. I’m sure this could be narrowed down with a little research.

Average family owns: 2.28 cars or pickups (source). The ratio nationwide is 55% cars and 45% pickups (source).

Average fuel mileage nationwide for cars is: 24.6 mpg.

Average fuel mileage nationwide for pickups is: 16 mpg.

Weight the number slightly to the favor of the cars since they have 55% of the total and I come up with an average of 22 mpg for cars and pickups.

13,500 miles per year average divided by 22 mpg =  614 gallons per year per vehicle.

Multiply 614 X 2.28 cars per family = Average U.S. family burns 1,400 gallons per year for all the family vehicles.

Current national average of gasoline / diesel (weighted towards gasoline) = $3.60.

Current price of natural gas refined methanol per gallon is $1.30.  (Raw cost = 30 to 40 cents + profit and taxes).

Plus add in the 60% range of methanol to gasoline = $1.83 equivalent range adjusted price to gasoline.

$3.60 minus $1.83 = $1.77 savings per gallon.

$1.77 X 1,400 gallons per year per family = $2,478 annual savings.

If the price were still at $4 for gasoline, the annual saving would be:

$4.00 minus $1.83 = 2.17 per gallon.

$2.17 x 1,400 gallons = $3,038.00 annual savings per year per family.

So we can reasonably say that the average family could save between $2500 and $3000 per year for their average 2.28 vehicles depending on how “generous” OPEC is at any given time.

Although the math is flawless here, it might not work out exactly like this. It might be not quite as good. It might be significantly better. As Mr. Cook says, "At best, this is a moving target because everything about the variables of my calculation are moving targets. Nothing is static – the price of oil, the price of methanol, MPG of cars and trucks, average cars per family — nothing."

But it's a very good rough estimate, and would create more discretionary income for us all, and that's always good for the economy. Two of the things Mr. Cook didn't try to factor in could also be significant: The continually rising cost of oil, and the petroleum costs on just about every other commodity. Because of the Save the King Foundation and many other factors, it is almost certain that oil prices will continue to rise in the foreseeable future. And since almost every product has been shipped, the rising cost of oil raises the price of everything else.

Each of us could have more money in our pockets every year. Let's pass the Open Fuel Standard and make it happen.

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