Sneaky Ways To Get Better Gas Mileage

Forbes - Jacqueline Mitchell

Motorists looking to save on a litre of gas needn't drive across province lines in search of cheaper prices at the pump.

The answer is right under the hood. That's because more frequent air filter changes can improve your vehicle's gas mileage by as much as 10%, the Car Care Council says. The filter keeps dirty particles from damaging the inside of your engine and helps it run more efficiently. The council, a consumer advocacy group that promotes vehicle maintenance, recommends checking the filter each time you change the oil every 3,000 miles (nearly 5,000 kilometres).

Other fuel-saving measures include keeping tires properly inflated, reducing your load and avoiding long idles.

These adjustments have never been more important. Last week, the nationwide average price for regular gas pushed toward $1.30 a litre, and prices are expected to rise, some say, to as much as $2.50 by summer.

"You can't control the price of gas, but you can control how much gas you burn by proper maintenance and how you drive," says Rich White, executive director of the Car Care Council. "Performing simple and inexpensive maintenance can save as much as $1,200 a year."

Top 10 Tips
We compiled 10 key fuel-saving tips and estimated fuel savings from the U.S. Environmental Protection Agency (EPA), the Car Care Council and the Federal Trade Commission (FTC).

But before motorists start calculating potential savings, all of the agencies we contacted cautioned that gas mileages are only estimates. The number of kilometres that you see per litre of gas will vary depending on such factors as the rate of speed driven and the amount of city driving versus highway driving. The latter requires fewer stops and starts.

One immediate step a driver can take is observing the speed limit. Aggressive drivers can save per litre if they ease up on the gas and brakes, according to the Car Care Council. You can also save by observing the speed limit and using cruise control during highway driving.

Using the manufacturer's recommended levels of octane gas and grade of oil also makes a difference. Luxury and high-performance cars usually require premium gas, which has a higher level of octane to prevent engine knocking or rattling in some vehicles. But regular gas is recommended for most vehicles; using a higher-octane fuel on these cars will provide little benefit, if any. However, using a higher grade of motor oil will cut into your fuel economy, according to the EPA, which publishes fuel-saving tips at http://www.fueleconomy.gov/, a consumer information Web site jointly maintained by the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy and the EPA.

Watching your weight also fattens your wallet. Piling a lot of heavy items on the roof rack can create additional cargo space, particularly in small cars, but it will also decrease fuel economy by 5%, according to the EPA.

What's more, car owners should beware of businesses advertising gas-saving products that promise to improve fuel economy, some by as much as 20%. These include fuel additives that claim to improve fuel economy and ignition devices that attach to an existing ignition system or replace part of the original system. The FTC and EPA warn that such claims are false.

Bottom line: If a new car isn't in your immediate future, don't sweat. By making a few lifestyle changes, you can get some relief at the gas pump.

1 Drive Sensibly

Estimated Savings: 7 to 49 cents per gallon

Speeding, rapid acceleration and constant braking are all symptoms of aggressive driving that waste gas. Pay attention to the traffic flow to maintain a more constant speed. You can lower gas mileage by as much as 22% on the highway and 5% on city streets by driving sensibly.

2 Replace Dirty Air Filter

Estimated Savings: 15 to 32 cents per gallon

Replacing a clogged air filter can improve your vehicle's gas mileage by as much as 10%. The air filter keeps dirty particles from damaging the inside of your engine. A clean air filter serves a dual purpose: It saves gas and protects your engine.

3 Bypass High-Octane Gas

Estimated Savings: 15 to 35 cents per gallon

Regular octane fuel is recommended for most cars. Buying a high-octane gasoline most likely won't improve your car's performance but will add to your fuel cost.

4 Maintain The Speed Limit

Estimated Savings: 10 cents per gallon

Gas mileage usually decreases rapidly at speeds above 60 mph. Observing the speed limit and using cruise control during highway driving will conserve gas

5 Avoid Long Idles

Estimated Savings: Additional miles per gallon

Allowing your vehicle to run idle for longer than a minute is equivalent to throwing money out of the window. You are burning gas but getting zero miles per gallon. Shut off the car; it takes less gas to restart it than what is being used while sitting still.

6 Check Gas Cap

Estimated Waste: Gallons of gas each year

Gas caps that are damaged, loose or missing can cause gallons of gas to vaporize, thus sending you to the pump sooner than necessary.

7 Get a Plan

Estimated Waste: Gallons of gas each year

Trips to the grocery store, dry cleaners and shopping centers should be planned so you are not wasting time retracing your route. If you have multiple vehicles, drive the one that has the better mileage. Make a list of what you need so you don't forget something and have to make a return trip.

8 Use the Recommended Oil

Estimated Savings: 3 to 6 cents a gallon

You can improve your gas mileage by up to 2% when using the grade of oil recommended by the manufacturer.

9 Keep Tires Properly Inflated

Estimated Savings: Up to 10 cents per gallon

When tires aren't inflated properly, it's like driving with the parking brake on, and that can cost a mile or two per gallon. You can improve your gas mileage by around 3.3% by keeping your tires inflated to the proper pressure.

10 Drop the Weight

Estimated Savings: 3 to 6 cents per gallon

Avoid keeping unnecessary, heavy items in your vehicle. An extra 100 pounds could reduce your miles per gallon by up to 2%, based on the percentage of extra weight relative to the vehicle's total weight, which affects smaller cars more than larger ones.http://www.forbes.com/2008/04/22/cars-mpg-gas-forbeslife-cx_jm_0422cars.html

Bank of Canada meets Tuesday

Volatile oil prices, the latest word from the Bank of Canada on interest rates and a report on economic growth at the end of last year will give investors plenty to chew over this week. The central bank is widely expected to keep its key interest rate unchanged at one per cent.

Economists have said that the central bank probably will not raise rates until the middle of the year, but governor Mark Carney's decision of exactly when has been made more difficult by the wild swings in oil prices.

"This turmoil that we have seen in North Africa and the spike in energy prices does introduce another element of risk to the global economy and specifically to the U.S. economy," said Doug Porter, deputy chief economist at BMO Capital Markets.

He said the task was much more straightforward for the central bank before the unrest in the Mideast because recent economic data has been so strong, including the trade balance moving into a strong surplus and a better than expected employment report for January.

"So the attention is going to turn to whether they drop any hints or start to sound a bit more upbeat and I think they will allow that the economic environment has improved a bit in the last couple of months. But I think overall they will sound quite cautious."

Meanwhile, investors are looking for some good news from Statistics Canada Monday when the agency reports on economic growth for December.

TD Economics forecast that gross domestic product is expected to show a solid (annualized) advance of three to 3.5 per cent in the final quarter of 2010, significantly stronger than the 2.3 per cent pace the bank expected in December. http://ca.finance.yahoo.com/news/Surging-oil-prices-Bank-capress-582423359.html?x=0

Why do mortgage rates rise fast, fall slowly?

John Greenwood Financial Post

Why do mortgage rates rise quickly but fall like molasses?

That’s the question posed by an article in the latest issue of the Bank of Canada Review, and it’s a good one.

The report, by Jason Allen of the central bank’s financial stability department, notes that the big banks that dominate the market tend to adjust interest rates faster when they’re on the way up than they do when rates are falling.

While it come as no surprise to borrowers that such is the case, the article draws an interesting conclusion: That such behaviour by banks and other lenders may have broader implications for Canada’s monetary policy, and that the central bank may want to take this into account when it comes time to plot strategy.

The report comes on the heels of a decision by the federal government to tighten mortgage rules as a way to head off a potential real estate bubble.

All the major lenders in this country tend to offer the same types of mortgage products, credit cards and other services, and in fact Canadians tend to treat their bank as a “one stop shop” where they buy a majority of their financial services, according Mr. Allen.

Leaving aside the issue of whether this is a healthy situation, the author concludes that the mortgage market is “consistent with a model where consumers have different preferences and skills when shopping and bargaining for a mortgage and where lenders maximize profits based on observing these preferences and skills.”

Simply put, borrowers are often complacent and end up paying more than they should.

One of the quirks of the industry in Canada is the prevalence of mortgages with terms of five-years or less, even though the loans amortize over as much as 40 years, according to the article.

Citing a recent study by John Kiff, a senior financial sector expert at the International Monetary Fund, it notes that Americans, by contrast, tend to opt for longer term mortgages than do Canadians, and they have a much broader choice.

The benefit of longer terms is that they provide the borrower with better protection against the risk of rising interest rates. If a loan is amortized over 25 years, the best way for the creditor to ensure he can always make the payments is to take a 25-year term.

Some economists refer to five-year products as “balloon mortgages” because of the possibility that the payments may suddenly shoot up at the end of the term.
Borrowers are also left vulnerable to “roll-over risk,” that the lender may be unwilling to renew the loan at any price.

According to Mr. Kiff, the main reason 10- and 20-year mortgages aren’t more common in Canada is because financial service providers consider them uneconomical.
Whenever banks make home loans they generally protect themselves from the risk that the customer may pay the money back early by including strict repayment penalties. But current regulations put strict limits on such penalties. “So the banks have this wall at five years,” Mr. Kiff said in an interview.

Bottom line: Lenders can’t charge what they feel they need to charge so they don’t offer longer term mortgages at an affordable price.

Mr. Kiff, who previously worked at the Bank of Canada, said Canadians would be better served if there was more choice of longer term mortgages. The IMF recently recommended that the federal government change the rules around mortgages so that lenders are able to provide broader product choice without unnecessary limits on how they charge for products.

What needs to happen is “at least, let the market determine where the rates should be,” he said. “What [mortgage] works best depends on the borrower, on the borrower’s own personal situation.”

http://business.financialpost.com/2011/02/17/why-do-mortgage-rates-rise-fast-fall-slowly/