Penny Wise & Dollar Foolish

In was recently reading an article that considered the gains in energy efficiency of newer technologies in home heating & air conditioning systems to that of many higher profile energy conservation initiatives that are popular with our culture today. For example; it is fashionable to recycle. Now, I am not saying that recycling is not a good idea. It is a great idea that we should all embrace, but recycling is a very small part of very big picture that we all need to participate in to be effective. Another trend that we are seeing, due to the rising fuel prices is that of fuel mileage savings, and a trend once again toward more fuel efficient vehicles. This latter is what I want to focus on and compare.

Let’s first look at the saving and expense involved in buying a new vehicle that gets an additional 10 mpg of fuel efficiency. In theory it sounds like a great idea, but let’s look at the down and dirty reality of this move as a true energy conservation effort.

First, a gallon of gasoline at this writing is averaging $3.92 per gallon nationwide. I am sure that will change by the time I get to the end of this a paragraph L. So, given an average annual travel of 15,000 miles per year, a car that gets 10 miles per gallon better fuel mileage will save an average of $980 per year in fuel savings. We Americans finance and keep our cars for an estimated 5 years or less. So, with an average payment of $350 per month extended over 5 years, we will spend $21,000 just to own our new vehicle that will now save us $980/yr or $4,900 over the five year period.

Now, let’s look at a new Heating & Air Conditions system. Residential HVAC equipment being built today has an average lifespan of 15 years. By replacing your current Heating & Air Conditioning system, you can easily gain a 15% increase in heating efficiency and 40% in cooling efficiency. In some case, higher gains are possible, depending on the age and efficiency of your current system.

So let’s look at the $$ numbers. With a current average heating and cooling expense of $2,100 per year, the above, average saving with a new HVAC system, could be near $615 per year. Remember, that the average life of this system is 15 years. That means $9,225 over the life of the new equipment.

Now the good news. This is where the comparison takes a turn. If you are a prudent shopper, you can purchase a complete replacement Heating & Cooling System for your home for under $3,500 and this includes you purchasing your equipment direct and employing the services of a local HVAC technician to help you complete your installation.

So let’s go back to the comparison:

New High Efficiency HVAC System Installed	<$3,500> (over 15 years)
Energy Savings with higher efficiency	$9,225 (over 15 years)
System pays for itself in savings and returns back to you	$5,725 (over 15 year)
New Higher Fuel Efficient Vehicle (10 mpg increase)	<$63,000> (over 15 years)
Energy Savings with the additional 10 mpg efficiency	$14,700 (over 15 years)
Added Fuel Efficiency Less Purchase Expense - Savings ???	<$48,300> (over 15 years)

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Now, I understand that in some ways, this is not a fair comparison. We will probably never choose one over the other, as cars are as much a part of our lives as home comfort, but the point is, that we get all stirred up over the chatter of fuel economy of our vehicles, when a much greater solution to part of our energy conservation issues is sitting right inside of our homes. You have the opportunity to greatly affect your personal wealth and be a steward to your environment. Be a smart consumer. Stop focusing on four wheels in the driveway and start with the thermostat on the wall.