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8.4 A NATIONAL NEWS SERVICE CANNOT DO THE MATH; FINANCIAL MATH, SIMPLE MATHEMATICS,
EXAMPLES FOR PERSONAL FINANCES
When
the price of gas shot up recently, a national cable news channel reported that a price
rise of 10 cents per gallon would only amount to a $20 per year increase in the cost of
gasoline for sports utility vehicles (SUV). These vehicles use more gas than the average
car. They assumed that average mileage for a year was 10,000.
When
I heard this report, I knew immediately that the numbers were wrong. How did I know? I
don't really know much about SUVs but I knew that this number was not in the ball
park.
First
I do not care what the price per gallon of gas is, I only need to know how much the price
has gone up. I do need to know that the average car gets over 20 miles to the gallon and
the SUVs get some of the worst mileage for passenger cars. Armed with this information
here goes the math:
$20
cost increase / 10 cents per gallon = 200 gallons of gas that the report claimed a SUV
would use in a year.
10,000
miles per year average / 200 gallons of gas = 50 miles per gallon which is a very high mpg
for any car much less a SUV.
In
short the national cable news service did not do the math.
So
how much would a very rough ball park dollar figure be?
Lets
assume a SUV gets about 15 mpg.
==
10,000 miles / 15 mpg = approximately 660 gallons.
==
660 X 10 cents = $66 per year increase in the total cost of gasoline per 10 cent rise in a
gallon of gas.
(NOTE:
Since the price of gas has gone up almost 30 cents in some areas, the total extra cost for
gas for an SUV could be about $200 a year.)
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