Save On Car Running Costs – Diesel, LPG, Hybrid or Downsize?

peak oil – the point at which oil producing countries can no longer keep up with growing demand

GUEST ARTICLE: This is a very confusing time for car buyers.With all of the talk of ‘peak oil‘, carbon pollution reduction schemes and climate change you may be concerned that petrol will just disappear from the pumps – or worse, become so expensive that you can’t afford to even run your car.

Whilst it’s highly unlikely that petrol will disappear overnight – indeed it won’t – you can’t be so certain that the oil price won’t skyrocket tomorrow – or fall back again just a few months later.

In that light, being careful in weighing up your car-buying options makes good sense.

Crucially, it’s understanding how reliant (or not) you are on your car day-to-day, how large the loads are that you regularly carry (both people and their goods and chattels) and how far you must drive that will underpin a sound decision. Whether or not you can think coolly and logically about your vehicle options will make all the difference.

You probably realise already that there are several options available, including hybrids, diesels and LPG – and you may know that purely electric vehicles (‘EV’s) are coming in the next year or 2 – or maybe 5.

Overall it really doesn’t look that clear right now, does it? So what should you think about in considering a new or used car purchase, or indeed in just saving money today on your car’s running costs?

Keep Your Car & Maximise Efficiency

  • It’s obvious, but if you really want to save on running costs, just drive less. Get out on foot, by bike or on public transport and save not only on fuel but parking and toll charges too
  • Car pool – if you really must drive, why not share? Investigate workplace, local council or Internet-based schemes like Car Pool NSW or OzCarPool
  • Or simply shop around. At the time of writing, the cheapest unleaded petrol in Sydney was around 112 cents per litre, whereas my closest local petrol station offered it for 126 cpl. Shopping around for fuel can save money, as long as you don’t burn more than you save by driving or queueing for the cheapest fuel. Apart from just keeping an eye out, there are web sites like WA’s FuelWatch and the national MotorMouth site that offer fuel-price searching
  • Dump excess weight – if you don’t need to carry it around, leave it at home
  • If you can, plan and combine your trips to avoid traffic jams, stop-start driving and unnecessary trips
  • Shut down when idle – don’t sit there burning fuel, turn off the engine and open a window if you get stuck in traffic
  • Keep your car in good nick and check and maintain tyre pressure
  • Don’t use excessive speed – accelerating and maintaining higher speeds requires power (and thus fuel). Freeway driving at 90kmh rather than 110 will burn around 25% less fuel (but remember to keep left and show courtesy to those who wish to go faster!)
  • Drive smoothly, in the correct gear (neither too low or too high), keep a safe gap to any cars immediately ahead, look down the road to anticipate obstacles before you get there, slow down gently rather than hit the brakes and minimise harsh acceleration. Maintaining your momentum is key to minimising your fuel use.

What Are Your Real Car Running Costs

Chances are that you will borrow to buy a car, new or used, and paying that back (plus interest) will remain the largest single running cost of all. Even if you save up and pay cash you will still suffer what economists call “opportunity cost” – basically the cost of foregoing alternative investments when you lock your cash up in a depreciating item like a vehicle.

Australian car dealerCar Dealer photo credit: Car Advice

Then there’s maintenance and repairs after warranty, annual registration and 3rd-party plus comprehensive insurance. Unless you drive a very, very large number of kilometres – or oil prices go through the roof – fuel will not usually be your number one yearly expense.

So your first job is to add up all of your expected car-related outgoings and do some comparisons between vehicles. This groundwork will give you some idea of what you will really be paying for that dream car, helping to put fuel costs into some sort of perspective.

Fuel consumption: Crunching The Numbers


Once you’ve decided what size and type of car you need (or want), it’s likely that most of us will still be looking at using and buying a petrol-engined car, or perhaps a diesel. So understanding and comparing the fuel consumption of different models is important, certainly if saving money at the pump matters to you.

To make things easier, checkout The Australian Government’s Fuel Consumption Guide database and Green Vehicle Guide The ‘Quick Compare’ tool on the right hand side of the Green Vehicle Guide home page is a great starting point.

You can select up to 3 makes and model of car and compare them by fuel consumption, fuel type, carbon emissions, Greenhouse and Air Pollution rating. This is an excellent way to do your ‘homework’ on fuel consumption and pollution

If you can’t find the make and model you want – perhaps it’s an older used car – the Fuel Consumption guide offers a great database of comparisons between models. You do need to be aware what kind of driving you do and consider the reality of your situation.

Both City and Highway consumption figures will offer a valid comparison between vehicles but may not reflect your personal situation. If you sit in traffic a lot or like to accelerate quickly your consumption will be higher than these figures. Nevertheless it gives you a starting point for a valid comparison

When you’ve done your homework on the cars you want to compare the Fuel consumption calculator is an easy way to do the maths.

Simply input the carbon emissions, fuel consumption, annual distance covered and fuel price you choose and press ‘calculate’ to see your total annual fuel cost and carbon output. Using this tool you can run some comparisons based on different fuel costs, factoring in likely price rises

If homework was never your thing and you are looking at a new car, you are in luck – there are now mandatory fuel consumption labels on all new cars.

Petrol, Diesel, LPG? Pros/Cons of Different Fuels & Engines

PETROL – what we are used to

It’s a remarkably powerful oil-based fossil fuel in high demand across the world with a raw material supply that’s both finite (there’s only so much out there folks) and controlled (both by cartels like OPEC and by governments bent on ensuring we don’t get entirely hooked on it alone). But it’s here and it works spectacularly well.

So you could stay with petrol, make no changes to the size or style of car you buy and just wear the cost. In the short term (perhaps 2-5 years, give or take) you may see little or no change, other than a small but steady rise in your running costs (ie fuel and lubrication). Worst case would see a substantial rise in fuel cost, especially after about 2015.

Labour and parts costs on engine repairs will also rise – if slowly at first – as a shift to other power sources takes hold. Expect resale prices on large cars to rise and fall in line with petrol prices before permanently heading down, dependent upon make.

With luck it may be 2020 before you really feel the pinch. Or it could hit a lot earlier, if world supply is cut, for whatever reason. Remember the past and plan for the future.

Downsize and economise. If you do choose to stay with petrol why not downsize your vehicle and drive with economy in mind? Perhaps even simply drive less. As fossil-fuel costs rise this will be the obvious first recourse.

Smaller vehicle mass means lower fuel costs, and driving smoothly will minimise your fuel bill. Whilst a practical and pragmatic approach, it still leaves you exposed to any major oil price fluctuations.

With any luck you’ll see out the next 10 years without a dramatic penalty at the pumps and perhaps make it to 2020 with wallet largely intact. But by then it will be hurting like never before.

PETROL – blended with Ethanol

Current Australian Government regulations coupled with pragmatic oil companies (who don’t want to stock an endless variety of fuels at the pumps) will see Regular Unleaded phased out over the next year or so, to be replaced with E10, a mix of 10% Ethanol and regular unleaded petrol.

Ethanol is a non-fossil bio-fuel typically made from grain or sugar cane, its prime environmental benefit being that it’s renewable (especially so if waste plant material rather than food-quality grain is used to make it).

If your car can handle a 10% Ethanol blend – and many modern and not-so modern cars can – it may save you money.

The downside is that petrol alone has a higher energy density, so adding Ethanol will lower the amount of energy you can effectively use per litre. The lower cost per litre may simply be negated by having to use slightly more fuel overall.

Ethanol may not be suitable for use in some engines, especially older ones, and may cause faster engine wear. To be safe, check with your car’s manufacturer before using an Ethanol blend.

You can view a list of car makes and their recommendations on Ethanol use at the Federal Chamber of Automotive Industries website.

There is also a wealth of additional info on Ethanol use at the Australian Government’s Department of the Environment site.

Chief advantages: In theory E10 is about 2 cents a litre cheaper than petrol, but as it’s still not available everywhere it’s not always so competitively priced. You know what to expect with petrol-engined cars.

Petrol/ethanol blends don’t change the game too much. They still make charismatic induction and exhaust noises and respond to the accelerator by revving out, dependent upon stroke and bore and all the ‘known’ variables of engine design. They are well understood designs built on over 100 years of development with mechanical repair shops readily available.

Chief disadvantages: internal combustion engines are complex designs, irrespective of the fuel used. Ethanol blends may also not be suitable for some cars. And if – or rather when – a shift occurs that drives investment and jobs into other (non-fossil-fuel) technologies the cost of maintenance will rise a lot, and quickly! It won’t happen overnight, though.

LPG – Compressed Liquified Petroleum Gas

Whilst LPG is another fossil fuel, Australia has it in relative abundance and – importantly from an environmental viewpoint – it burns cleaner than petrol. So what comes out the exhaust pipe is just a bit less nasty.

Now the fuel economy of LPG-powered vehicles is dependent on many factors but generally speaking late model vehicles running on LPG – or what’s know in the market as “Autogas” – will use around 20 to 30 percent more fuel than a similarly-sized petrol-powered equivalent.

Whilst that doesn’t sound at all attractive, LPG at the pump is often around half the price of unleaded petrol (assisted by a lack of excise, something that will not necessarily be the case into the future). So whilst you lose in volume you pick up the savings on overall running costs.

Set against this may be the cost of converting an existing car, or the extra cost of buying a new LPG-ready car. Options exist to run dual fuel systems, too, so you can fill up with petrol if needs be. Another downside is the size of your LPG tank, a bulky unit that has to go somewhere and will most likely consume some of your load space.

Chief advantages: whilst you may use up to 30% more than petrol, it currently costs only about half as much per litre (or around 60 cents per litre). It’s also not so different from a petrol-engined car. It still sounds and responds like a petrol-engined car and you fill up at a petrol station, you just need to go to a different pump and connect with a special fitting.

At current prices (and excise rates) you will gain overall if you drive a lot or keep the car a long time. The engine will also run cleaner and last longer with less wear and tear. Does that sound ideal for a high-mileage private, taxi or fleet owner?

Chief disadvantages: it’s still an internal combustion engine, still complex and reliant on a fossil fuel, even if the fuel is more abundant and cheaper. You are reliant also on continued Australian State and Federal government support and subsidy of LPG installations and the current lack of excise duty (something that is planned to change – if slowly – from 2011 onwards). There’s a risk that the savings will evaporate.

Diesel – and Biodiesel

Diesel is familiar to us for its long-time use in trucks and buses, and many Eurpoean cars have come with a diesel option for decades. It’s another oil-based fossil fuel, but essentially less refined than petrol and thus a bit cheaper to make.

It self-combusts at higher pressures than petrol, eliminating the need for spark plugs and gaining ground in efficiency. Performance-wise it doesn’t rev quite like a petrol motor, rather it produces prodigeous torque at low revs, making it ideal for pulling heavy loads.

Modern car-based diesels run smoother, knock less at idle and rev easier than the old ‘oilers’ of the past and have become a popular, more economical replacement for petrol engines.

Biodiesel is a diesel substitute made from vegetable or animal oil (technically it’s made by reacting a lipid – the oil – with an alcohol).

Biodiesel is generally a straight swap with petroleum-based diesel (but check with your manufacturer first), whereas the similar diesel substitutes Waste Vegetable Oil and Pure Plant Oil may need some vehicle modifications to ensure safe long-term running.

Again, check with your manufacturer and with your local authorities if you plan to ‘brew your own’ as there are fuel excise regulations to consider.

Chief advantages: Diesel is currently about 2-5 cents per litre more than petrol, say 115 cents per litre, but you’ll use around 20% to 30% less. Again it’s like a petrol-engine, just different. It sounds and responds a bit differently, and again you still fill up at a familar petrol station, just at the diesel pump.

Like LPG at current prices you will save overall if you drive a lot or keep the car a long time. The engine is less complex than either a petrol or LPG-powered vehicle and easier to maintain with slightly fewer parts to ‘go wrong’.

Diesel is less refined than petrol and if used to a greater extent would ‘stretch out’ our dwindling reserves of oil. It does run dirtier with particulates (soot, if you like) a concern, but it’s getting better all the time. Ideal for a high-mileage car owner, for anyone with a need to tow a load, or a taxi or fleet owner.

Biodiesel or similar substitutes may save you some additional cash if feasible for your vehicle and in keeping with local regulations.

Chief disadvantages: it’s still an internal combustion engine and mostly reliant on a fossil fuel, and it’s dirtier than LPG or petrol in some respects.

Even the non-mineral based oil substitutes have downsides, be it loss of food production for fuel making or the need for modifications to avoid excessive wear. Don’t mix up the pumps and put petrol in the diesel tank, it can be a costly mistake.

Hybrid – “Dual-Fuel” Option

Hybrids really aren’t that new but for automotive use their time may well have come. (If you think they are truly cutting-edge ask a railway engineer just how long diesel-electric “hybrids” have been used as locomotive power-plants.)

Simply put, they are hybrid combinations of 2 engines, usually pairing a petrol engine with an electric motor, but also optionally using a diesel or LPG-fueled engine in place of the petrol one.

The idea being to take advantage of the instant-on torque of an electric motor to reduce reliance on the petrol engine (allowing it to shrink in size and thus fuel consumption) and to extend the range of the electric motor by supplementing it with the petrol engine on longer or faster journeys.

The petrol engine can also be used to recharge the batteries, and the design may or may not offer “plug-in” recharging (from the electric mains) as well.

In this way a hybrid effectively overcomes the range shortcomings of a pure electric motor-and-batteries combination (where you currently may only get 100km or so before running out of juice) whilst decreasing the liquid fuel consumption (and exhaust emissions). A win-win.

Chief advantages: compared with a similarly-sized conventional petrol-engined car, a petrol-electric hybrid like the Prius (or the Honda Insight) will consume around 30% to 40% less fuel, dependent upon terrain and driving style.

It’s seemingly the best of both worlds – a petrol, LPG or diesel engine that you feel comfortable with, plus an electric motor to help out when needed. Whilst it’s familiar, it’s also very different. It sounds different, doesn’t rev out like a pure petrol engine and at low speeds is bewitchingly silent.

The transmission is also different from what we expect in most cars and the overall design and styling often (but not always) accentuates the differences.

You may also feel ‘greener’ or ‘cooler’, depending on your point of view. Theoretically it will give you far lower fuel consumption and cleaner exhaust emissions, and potentially lower daily fuel costs than comparably-sized traditionally-fueled car.

Chief disadvantages: it’s still got an internal combustion engine at its heart and by virtue of the design itself is even more complex than a regular petrol-engined car.

It carries a load of expensive batteries with a finite life (that will have to be disposed of in an environmentally-friendly way) and remains to a great extent reliant on a fossil fuel. Because of its inherent complexity it is likely that out-of-warranty running costs and repairs will be higher than for the “average” car and specialist technical assistance will be required.

These (admittedly as yet unproven but likely) longer-term costs will potentially flatten the resale value at some future point. If such hybrid designs prove only to be stop-gaps in automotive evolution (and we really don’t know yet which fossil-fuel replacement technologies will finally “win”) then it could be an expensive trip down a dead end. Or it really could be the way to go.

Should I buy an Electric Vehicle (EV)? – If Only!

Sadly, despite a lot of publicity there are no easily-obtainable mass-market EVs available in Australia – yet. They could be here within a year but the asking price per car will be high. Not because they are inherently more complex to make or support – quite the opposite, they should be simpler – but because EVs will be different, initally built in lower volumes and carry a premium to cover the technology development, technical training and parts stocking.

SAVE - Remise de clés de véhicules électriques à sept agents du Département
photo credit: Conseil général des Yvelines

And not least of all they will come pre-loaded with a large bank of very expensive – usually lithium – batteries. Because of this steep initial buy-price car makers are expected to explore new models of financing (you may for example lease rather than buy the car and/or its batteries, for example) to get the price down.

Chief advantages: electric motors are much simpler to design, make and service. They have fewer moving parts and will last a very long time. Unlike internal combustion engines the electric motors can be placed close to the wheels and other components (like batteries) distributed around the vehicle to optimise load carrying and/or vehicle handling.

They also have massive instant-on torque (imagine the torque that’s applied to the driving wheels of an electric train as it pulls fully loaded from a dead stop) and a far simpler – almost non-existent – transmission design.

There is no exhaust emission from the vehicle and it runs with a whir rather than the roar of an exhaust. Our cities will breathe easier and traffic noise will decline. Currently electricity is far cheaper than petrol, but that is likely to change as demand shifts.

Chief disadvantages: EV batteries are currently very expensive and will require expensive, environmentally-aware removal and replacement at end of life (which could be every 10 years ro so). The weight and sheer number of batteries is also an issue, at least for now, in that space and weight must be considered in terms of distributing mass around the vehicle.

The overall safety and integrity of the vehicle must be carefully considered as well as the utility – a difficult balance to maintain, at least until the batteries are made smaller and lighter. And the biggest disadvantage of all – overnight recharging every 100km or so.

For many city drivers this is no problem, but for anyone who commutes that far or more in a day – or regularly travels between Australia’s outback towns – it’s a major issue.

Whilst there are people working on this problem – offering solutions such as fast-recharging stations in car parks and standardised, exchangeable battery packs – there is no one generally accepted answer nor any such service on the ground, waiting for your EV today.

EVs are also virtually silent, especially at low speed, something that may take a while for pedestrians to get used to. Last but not least, EVs shift the pollution load, if you like, to our electricity generators. If they are “dirty” coal burners then the net resuilt may be poor overall, even if locally our city air quality improves.

And the increased demand of EV recharging on our electric power generation and distribution system will quickly bring to light any issues with inadequate supply. In any event it could be 5 or 10 years before significant numbers of EVs are prowling our streets.

What about a Hydrogen-powered car?

The car that runs on water, or that produces nothing but water vapour from the exhaust is a wonderful story full of high-tech promise – but little reality.

Yes, cars and buses that run on hydrogen exist now in trials but there is one key unanswered question: where does the hydrogen come from? Abundant element it may be but before being highly compressed, stored and distributed (in infrastructure that doesn’t yet exist) it needs to be separated from water or from a complex hydrocarbon like oil.

Now we already have a more direct method of getting stored energy out of oil, so logically we’d look to split the Hydrogen from water using electrolysis. But to get the energy to do that means burning coal, gas or oil – or installing vast fields of solar panels or wind farms – just to provide the electricity to crack the H out of H2O.

So why not cut out the middle man and just run EVs instead? Hydrogen-powered vehicles may yet be developed that use biomass to power fuel cells but these are not a practical solution for today.

So What Cars Are People Buying Now?

We can answer that question with a visit to the Australian Government’s Fuel Consumption Guide database and Green Vehicle Guide. In the ‘Green guide’ section of that site (in February 2010) there’s a simple ranking of what are considered ‘top green performers’ versus ‘top sellers’:

The Top 10 performers by the Green Guide looks like this:

  • Toyota Prius
  • smart fortwo
  • Suzuki Alto
  • Fiat 500
  • Fiat Punto
  • Honda Jazz
  • Toyota Yaris
  • Toyota Camry Hybrid
  • Volkswagen Golf
  • Alfa Romeo MiTo

Whereas the Top 10 sellers in Australia looks like this (only 1 of them is in the top 20 Green options list):

  • Holden Commodore
  • Toyota Corolla
  • Mazda 3
  • Ford Falcon
  • Toyota Hilux 4×4
  • Hyundai i30 (18th in top 20 Green)
  • Mitsubishi Lancer
  • Toyota Camry
  • Hyundai Getz
  • Nissan Navara

You could be forgiven for thinking that saving money (or the planet) is not really on the radar when we walk into a car dealer’s showroom, but it’s especially worth noting that most of the top-ranked ‘Green Guide’ cars are relatively small and expensive imports (Camry Hybrid excepted).

It may be that many car buyers are unconvinced of the value represented by these efficient yet smaller vehicles, not comfortable with the size or perceived safety of some of these cars or perhaps distrustful of the long-term availability of spare parts or servicing of small-volume imports.

Whilst they may actually be very sound, safe, reliable choices they are largely not our typical mass-market or fleet-sales models either.

On the other hand there’s every indication in the Top 10 sellers that smaller cars such as the Corolla, the Mazda 3, the Mitsubishi Lancer, the Hyundai I30 and the Getz are moving up the sales charts and claiming an increasingly large proportion of the market.

So the trend is to down-size, typically from six-cylinders to 4. That alone will save you on fuel costs, especially in city driving.

Conclusion – Save On Car Running Costs

For fuel consumption it’s a close race but hybrids win from diesels. If you don’t want to be on the cutting edge, buy the diesel. If you must buy a petrol-engined car, get a smaller one. If you can downsize, do it.

EDITORS NOTE: at present hybrid cars like the Toyota Prius have a significant price premium ($10,000-$15,000) more than a similarly efficient and equipped diesel car.

Above all, your behaviour as a vehicle driver and purchaser will make or break your running costs. Buy a large, fast, expensive car of any engine type, borrow too much to pay for it and then drive it like you stole it and your outgoings will be through the roof. Buy only the car that you need, borrow less and drive it with care for its longevity and you’ll save.

This guest article has been written by my friend Rob Russell. Rob lives just outside Sydney with his wife, 3 kids, his bicycles and a 1982 Alfa Romeo GTV. He has owned “far too many” cars and confesses that he would have been a rich man if only he’d taken his own advice. Rob’s day job is as an IT Consultant and he tweets regularly on cars, bikes, photography and music as @gtveloce

If you’re a blogger or an expert about a topic I cover on this blog I encourage you to contact me and I’ll consider publishing your guest article here including generous attribution and back links back to your website as thanks for your contribution


9 responses to “Save On Car Running Costs – Diesel, LPG, Hybrid or Downsize?”

  1. This is a very comprehensive article on the whys and wherefores of Fuel consumption and choice of car. Some great tips also for fuel conservation. I tend to agree with the sentiment alluded to that some of the smaller, “greener” cars suffer from their size and perceived safety.

    I’d love to get a Smart car (apart from the efficiency I think they actually look smart), however on the rat race that is my daily commute, I feel that I’d come out a lot worse of than the ubiquitous 4x4s and “tanks” – mostly driven by mothers on the school run, I’d note.

  2. At this moment I prefer diesels over hybrids. In the longer-term I think electric cars will be the most popular choice among consumers.

  3. diesel as a fuel rated far cheaper than any other can save around 28-30% of your expense cost. Along the cost feature diesel consumption is also not so high because it can generate more power at a similar certain amount of quantity

    EDITOR: Diesel is more expensive than petrol in Australia

  4. We love our Prius, and our neighbors did too. So much so that they got one of their own!

  5. Some excellent tips on maximising your fuel efficiency. It seems obvious, but there are lots of small things you can do to save on fuel without even really impacting your life, like driving less and carpooling. It’s easy to forget that there are simple solutions like that that can make a difference in the long run.

    You present a very interesting and detailed discussion and I agree with your conclusion that hybrids are the better choice for smart fuel consumption. This would be a very useful guide for anyone shopping around for new or used cars.

  6. […] read more at Save On Car Running Costs – Diesel, LPG, Hybrid or Downsize? […]

  7. Brilliant article! Very informative and succinct over this specific but widely-scoped topic. If only the marketing and advertising teams could get cracking and push for consumers. I find that most people are very aware of the pros and cons, but I reckon that more initiatives and incentives should be made available. If only…

  8. EV’s will never be the long term large scale answer until there is a significant investment in base load power. If you are truly environmentally conscious AND you want to keep the lifestyle that we in a First World country enjoy (through cheap power) than the only answer is nuclear. That will solve your base load power problems, allowing you to charge as many EV’s as you’d like. It would also provide the power for the hydrogen electrolysis process if you wanted to go down that track. That would need investment in more (and different) infrastructure than you would need in EV.

  9. diesel engines are better fuel economy and longer engine life. new diesel engine designs using advanced computer control are eliminating many of its disadvantages.

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