Taking a vanpool to work most days makes we wonder how much money I am saving or losing for the hassle and convenience of the van. Figures from AAA and the IRS put the cost at upwards of $0.50 per mile, but these include ownership costs and insurance, which I am paying whether I drive my car to work or not. (I haven’t noticed significantly lower insurance rates for reduced mileage.) A commuter site even puts the cost at $1.19 per mile by monetizing dubious items like Travel Time and Barrier Effects on Pedestrians and Bicycles. If anything, travel time is a savings for me compared to the vanpool.
I’m looking for the marginal cost for each mile driven, assuming I own the car and pay the same insurance and tax regardless of how much I drive. Below is my own estimate based on three factors: mileage-based depreciation, fuel costs and maintenance costs.
High mileage cars are worth less than low mileage cars, so there is some marginal depreciation cost, assuming I expect to sell the car someday. Depreciation is less for old cars, but I’ll use a constant rate assuming any decrease due to age will be roughly offset by increased maintenance costs. To estimate depreciation I looked at Kelly Blue Book values for a popular car, a 2004 Honda Accord LS, at different mileage amounts from 30,000 to 60,000 miles. For cars in the same condition, the price difference was about $865 per 10,000 miles. If the extra 30,000 miles makes the car drop a notch in condition, which seems reasonable, the price difference goes to about $1200 per 10,000 miles. I’ll guess 30,000 miles causes half a notch drop in car condition and go with $1000 per 10,000 miles. That’s $0.10 per mile for mileage-based depreciation.
This one should be easy, but fuel costs are frequently changing (currently about $3.30/gal), and it seems there are hidden costs that we don’t pay for directly in the U.S., such a pollution costs and road wear. Since other Western countries put more of these costs into the fuel taxes directly, I’ll attempt to compensate for that. A quick search suggest gas costs between $6 and $7 per gallon in the UK and France. Not knowing exactly what all those extra taxes are for, I’ll split the difference and say gas costs effectively $5.00 per gallon. I divide that by my car’s average miles per gallon, which is about 45 for my Prius, and I get $0.11 per mile for fuel. (It’d be double that for a “regular” car getting 22 MPG.)
It’s hard to imagine getting more imprecise than my above estimates, but I’m willing to guess on this one, too. For a car only a few years old I’m guessing about $200 per 10,000 miles for things like oil changes and replacing parts such as brakes and tires. I’m not adjusting up for age since I didn’t adjust down for age in depreciation. That’s $0.02 per mile for maintenance.
Total Marginal Costs
The total margin costs is then $0.23 per mile. That’s about $9.20 per day for my commute (20 miles each way beyond the distance to the vanpool lot). Assuming I take the van 15 days a month, that’s $138 saved.
That’s more than I expected. Taking a conservative tack: if the car stays in the same condition regardless of miles driven, that’s $0.09 per mile for depreciation. If gas costs are complete and constant, that’s 0.07 per mile for fuel. If maintenance is low, that $0.01 per mile for maintenance. The conservative total is then $0.17 per mile and $6.80 per commute and $98 for 15 days. And that’s still assuming at 45 MPG car.
For a typical 25 MPG car, my best guess estimate from above becomes $0.32 per mile and my conservative estimate becomes $0.23 per mile.