Fuel

As gas prices threaten to tick past $4 per gallon, Edmunds.com debunks popular gas price myths and offers some reasonable steps every driver can take to ease the pain at the pump in a new report.

Gas price myths:

• Rising gas prices are forcing families into bankruptcy. Edmunds.com looked at a hypothetical household earning $50,000 a year with two cars: an around-town hauler (larger SUV) and a commuter car for getting to and from work (a smaller more fuel-efficient vehicle). At $3.00 per gallon, annual fuel costs for this household comes to about 7 percent of the total household income, or about $3,500. At $4.00 a gallon, that proportion moves up only slightly to 9 percent of the household income, or about $4,500. "In short," says Reed, "if this family were to go bankrupt, steep gas prices would not be the main reason."

• Trading in an SUV for a hybrid will save a lot of money. This is a knee-jerk reaction that often proves to be a financial misstep. Say that your SUV has a $10,000 trade-in value while your new hybrid costs $25,000. It could take over 8 years to make up the $15,000 balance in gas savings. Of course, every situation is unique, so Edmunds.com offers a Gas-Guzzler Trade-In calculator at www.edmunds.com/calculators/gas-guzzler.html to help you better understand whether trading in for a more fuel-efficient new car makes sense. Read more