Woodstock wrote about the Green Dilemma earlier this week. I thought I’d pick off a couple of cases and work through the math parts to determine if savings would really be economic savings.
Case 1: consider my 15 year-old Kitchenaid top-freezer with an ice maker. The Kitchenaid Marketing Literature says the technology has improved:
if you’re still using a refrigerator manufactured before 1993, you could save nearly $100 a year in utility bills by buying a KitchenAid built-in refrigerator.
The problem: this spectacular built-in appliance starts at $4,500, making the economic incentive a non-starter.
Let’s look at something comparable, a 20.6 cubic foot Sears Kenmore with an ice maker, available about $30 less than I paid for my existing refrigerator in 1993. According to the Energy Star Calculator, the annual cost of electricity for my existing refrigerator is $97.93, assuming it uses 933KWh per year. The brand new Kenmore uses an estimated 432KWh per year, which would cost $45.34 for the electricity. Its annual savings is $52.59. The return on investment:
$839.99 / $52.59 savings/year = 15.97 years
And for comparison: 2008 New Refrigerator – 1993 Old Refrigerator = 15 years.
Conclusion: it’s not worth replacing until my existing refrigerator gives up the ghost. I would first try fixing my fridgeif I could find the parts at a price I was willing to pay.
Case 2: Consider the options for a more efficient car. My 2002 Subaru Impreza station wagon has an estimated fuel economy of 19 – 25 mpg. In practice, it’s more like 22 (city) to 30 (highway). A 2008 Toyota Prius fares 48 (city)/45 (highway). Let’s assume the average rating and calculate the annual cost in gasoline, using today’s price:
Prius: 5,300 miles/year / 46 miles/gallon = 115 gallons/year
Subaru: 5,300 miles/year / 22 miles/gallon (we’re being pessimistic) = 241 gallons/year
Savings = (241 g/y – 115 g/y) * $4.399/g = $553/year
If someone were to give me a Prius, I would drive it. But as that’s not likely to happen, I’d need to buy one. They’re in high demand, so dealers are applying ADP onto the price. The cheapest I found (and probably sold by now) was $24,234. On top of that would be tax (8.9%), title, license, rust undercoating, muffler bearings, digital radiator, flux capacitor and sound proofing. Let’s just round up to $27,000.
Assuming the annual gas savings of $553 holds, it would take 47 years to break even:
$27,000 / $553/year = 48.82 years
It’s easy to consider some other assumptions:
- I get $10,000 trade-in value on my car (sold to a Hummer driver): break even is 30.7 years.
- I drove the national average of 12,000 miles per year instead of my paltry 5,300 (which is, like, five Susan Dennis years). Annual savings is now $1,252/year. Break-even for scenario 1 is 21.5 years. Break-even for the trade-in scenario is 13.58 years.
- I buy the used 2003 Prius model with 65,147 miles on it for $18,995 and sell my existing car for $10k. At the original mileage rate, it’s 16.2 years to break even. ($18995-$10000)/$553 = 16.26.
- Same case, but I drive the national average of 12,000 miles per year. Breakeven is now 7.18 years.
Conclusion: it’s not worth replacing until my existing car gives up the ghost. And even then, the Prius is difficult to justify with my assumptions. (Ted: I also tried the beauteous Honda Goldwing Touring motorcycle at 37mpg. Any other recommendations?) One option that makes sense is a Vespa. At about $5k new — and tricked out with leftover flame decals — it gets 75 mpg. I can take the $5k leftover and buy another couple of bicycles and a tandem.
The problem: this spectacular built-in appliance starts at $4,500, making the economic incentive a non-starter.
Don’t be silly- it pays for itself in 45 years!
Hot rod flames make just about anything totally, awesomely cool. I’m thinking about sticking some to my monitor at work just to provide the illusion that working is something I want to do.
The Green Dilemma is really all about choice, isn’t it? Choose to change what you can in the smartest way possible; and the wisdom to know the difference. Besides, I think I’m probably red-lined by neighborhood from having that Kitchen Aid ‘fridge. ;)
As you noted, it seems wasteful to throw out a scruffy, but still functional _____ only for the sake of saying one’s “green” by having the new, more efficient _____.” The marketing obfuscates the economics behind the decision, too.
There is a certain amount I’m willing to absorb on my own, and these two cases aren’t among them. In other areas, I’m doing great: electricity and water use are below average, I typically have 2x the volume of recyclables to garbage, and I “occasionally” use my bike instead of driving.
One of the questions I’ve never seen an answer to is: what is the environmental cost of replacing a functioning_____ with a more, highly, efficient newly manufactured ____? What is the “carbon footprint” of producing a new machine versus continuing to use the less efficient machine? It would have to include collection of resources, mining metals, recycle metals, etc.; the transportation of those resources; the actual manufacturing costs; the development costs; the marketing costs; the distribution costs; the cost of disposal of the old machine; etc. Of course the costs I’m talking about are not the economic but the environmental cost.
Did you take the replacement cost of the Prius batteries into account?
If you have to replace the batteries every 10 years (and from what I’ve read, that’s optimistic), reaching the break even point is even harder to achieve.
Your calculations assume a constant price for gasoline. It’s gone up something like 50% in the past year. If this rate continues, you’ll pay more for your old car’s extra gas consumption and it’s trade-in value will drop too.
Yep. I don’t have any basis for predicting future gasoline prices. The economist in me thinks it’s overpriced due to geopolitical speculation, the weakness in the US Dollar, demand, and the phase of the moon. The Energy Information Agency forecast (http://www.eia.doe.gov/oiaf/forecasting.html) shows tapering down to the lower $80s/barrel.
You can see there is a cyclical nature in Seattle’s pricing. During the last four years, we’ve averaged a 22% increase. We’re also in the peak of the season.
Even if gasoline was $10/gallon, my car’s residual value was $8000, and I increase my driving to 12k/year, we’re still talking 5 1/2 years until the Prius is worthwhile.
If you are going to make the flame decal cracks IN the entry, what in the heck am I going to use for content in my comment? Seems like you could be a little more considerate of your readers. I’m just saying.
Jim,
You just don’t get it.
Being green is for the CHILDREN. You should do the following:
- Not use a fridge at all. They have been around, what 60 years? You should carve out ice from lakes in the area during the winter, put them in sawdust, and store them. And when they melt, well, that was what salt and curing are for, aren’t they. Maybe you can bring back the “ice house”? That’s what they were – storage places for blocks of ice for “fridges” way back when.
- What’s this car business, Mr. Cyclist? Why you have a car? Going the airport and getting in a PLANE for a business trip? ACK! You should quit your job, do organic farming, and take your goods to market on your bike if you had any self respect.
In the mean time, I will consume all the resources as possible. My goal is to leave as big a carbon footprint as possible before I die.
I really, really hate it when hard fact and analysis blows my biases away.
Now I have to use your method to try to cost jutify replacing my used 18 mpg tops Durango Hummer wannabe with a used Subaru just like yours.
God, it’s GOOD to be HOME at last!!!!
Dougbackhome
Hey Jim, you may want to try http://www.partselect.com to find some parts at a good price. I ordered with them before and I found they had the lowest price for the part I was looking for. Good luck!
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