So, are you ready to buy a hybrid?

Many people are. After all, according to M.J Ervin and Associates, gas this week is averaging $1.36 a litre across Canada and automobile diesel is up to $1.47 a litre.

Okay, there are those who say there is  no need to panic, that there have been signals this week that the price of oil may be stabilizing in the US$130-$140 a barrel range. For the short term, pump prices might actually go down thanks to several factors: 

• Saudi Arabia has promised to juice production by 200,000 barrels a day;
• Iraq is hoping to increase production by 600,000 barrels a day (though who knows when);
• China is  raising fuel prices to dampen consumption;
• A weekend summit  in Saudi Arabia  between oil consuming and producing nations is scheduled to address high prices -- prices that have sparked global protests and have some OPEC (Organization of  Petroleum Exporting Countries) members worried that national economies could  collapse under the weight of expensive energy.

Pay no attention to any of that; the long-term trend is for higher fuel prices. Get used it.

Oil is no longer a cheap and easy-to-get commodity. Too many of OPEC's members are countries run by unstable totalitarian  governments/monarchies/lunatic dictators. Remember, they still regularly behead  people in Saudi Arabia and  Hugo Chavez in Venezuela  is just a plain nut-job, and a dangerous one at that.

Believe it when analysts in the know say oil is heading to $200 a barrel. The West is not going to cut consumption dramatically any time soon and  China and India and other emerging economies will keep sucking up oil production no matter how fast it  rises. Prices go up as demand rises and global demand is not going to hit  reverse in the foreseeable future.

All this talk about fuel pricing matters because until the recent surge at the pump, buying a hybrid was a dumb financial decision. Gas-electric  hybrids cost about 35 per cent more than a comparable conventional vehicle and  there was no way to recoup that extra outlay in fuel savings - not over several  years, in fact. Hybrid buyers up to now have mostly spent extra for doing a  good deed for the environment.

That's because hybrids offer better fuel economy and lower emissions than comparable gas-only cars by switching to an electric motor whenever  possible, shutting down entirely whenever possible and capturing energy from  braking to recharge the batteries.

All that is good for the planet. The Toyota Prius hybrid, for example, has about half the carbon footprint of a regular Honda Civic sedan.

Now a lot of people would like to do the Al Gore thing, but couldn't  afford the price. No more. A flood of studies reveals that strictly from a cost standpoint, buying a gasoline-electric hybrid can be the smart thing to do financially, as well.

In a nutshell, fuel prices and various government subsidies are making hybrids  more attractive cost-wise. High fuel prices have chopped the time period  required for fuel savings to pay back the so-called hybrid premium. Not on all  models, mind you, but many.

So  go ahead, get a hybrid for environmental reasons and save money. Just shop  carefully. Certain hybrids are still too pricy or deliver overly modest fuel  economy improvements. You'll want to think carefully before buying one of them.

The British Columbia Automobile Association (BCAA www.bcaa.com) can help you here. BCAA has for the second time crunched the numbers on buying and  operating hybrid vehicles, this time assuming an average gas price of $1.40 per litre and 20,000 km per year of driving.

In seven of 13 cases, the hybrid option worked out to be cheaper over five years than a similar convention model.

The real winners in the study were the Honda Civic Hybrid, Toyota Highlander Hybrid, Toyota Camry Hybrid and Lexus 400h Hybrid.

The Civic Hybrid  proved to be $3,868 less expensive to run over five years versus a conventional  Civic. The Highlander Hybrid came in at $2,765 cheaper over five years versus  its conventional counterpart, the Camry Hybrid $2,135 and the 400h Hybrid  $1,816.

Some comparisons were difficult to make. The Toyota Prius, the original  hybrid, for instance, has no conventional counterpart.

So BCAA compared it  to the similar Toyota Matrix and found the Prius would cost $68 more to drive.  A wash, though the small carbon footprint of the Prius -- the smallest by far of  any of the 13 hybrids studied -- makes it attractive for environmental reasons. 

Okay, here's the bad news. Some hybrid makes and models are still more  expensive to drive, despite $1.40/litre gas. The Nissan Altima costs $1,451 more to operate than the conventional version, and the Lexus LS Hybrid costs $46,566 more to own and operate over five years. Blame the much higher purchase  prices on these models.

"What this analysis shows is, at current gas prices, most hybrids will  end up being either less expensive over five years or within a few hundred  dollars of their conventional equivalent," says Trace Acres, BCAA's director of  corporate communications and government affairs.

"On the other hand, the price premium charged to own some higher-end  hybrids won't be recovered regardless of the price of gas."

The savings come from a combination of factors: falling hybrid prices,  government rebates and tax incentives, and rising gas prices. Many provinces,  including B.C. and Ontario,  offer generous incentives to hybrid buyers.

The federal government also has its ecoAUTO program subsidizing the purchase of fuel efficient vehicles, including most hybrids. It expires after the  2008 model year.

Three  years ago a similar BCAA study found that hybrid owners could expect to pay  more to operate their autos over five years than conventional-car owners. Back then, the BCAA assumed average gas prices of 95 cents per litre.

In  the United States, Consumer Reports in 2006 also did quite an elaborate analysis, factoring in  depreciation, savings from tax credits and maintenance costs. The conclusion: most  hybrids cost more over five years than their standard counterparts.

Even now, if what you're really after is the best fuel economy bang-for-your-buck, a forthcoming Consumer Reports analysis will conclude that  you should buy a Honda Fit. Read about it in an upcoming issue of the magazine.

Nonetheless, hybrids will save you money. Like the BCAA, that is also what www.Edmunds.com  found in a new study. For instance, a U.S. comparison of the Prius versus the Toyota Camry shows that it takes three years for the hybrid's fuel savings  to pay back the Prius price premium.

Government subsidies are different in the U.S., so direct comparisons are  tricky. But the key point in this study is exactly the same as the one in the BCAA study: the higher price of fuel is making hybrids more financially  attractive. 

Like  the BCAA study, Edmunds' calculations focused on the cars' sticker prices --  comparing the amount paid for a hybrid model over a gas-engine version of the  same model, if available. Edmunds went further in factoring in rebate offers on  the vehicles. Like the BCAA study, Edmunds also included U.S. federal tax credits which down south can  reach up to $3,000 (US).

Of course, if you are thinking about a hybrid, you're best to fully evaluate  your needs and your available financial resources. You might find that a  fuel-efficient, four-cylinder car like the Fit is a better route.

However, if you are thinking about a hybrid, do not forget that the ecoAUTO Rebate Program expires at the end of this model year and that will cut  the cost savings on some hybrids by as much as $2,000 a year.

"If you're interested in buying a hybrid and maximizing your savings,  2008 may be the best year to buy," says Acres, who adds that applications for the ecoAUTO rebate can be submitted until March 31, 2009. The rebate applies only to new vehicle purchases, and 2009 vehicles will not be eligible.

About the BCAA study

BCAA compared the purchase, financing and operating costs of all 13 hybrids available in British Columbia  with comparable conventional models over a five year period. The variables included in the study: fuel costs, the provincial Alternative Fuel Vehicle Tax  Concession and the federal ecoAUTO Rebate Program.

Here is how the 13 hybrid vehicles in the study fared versus their  conventional counterparts:

Honda Civic EX versus Honda Civic Hybrid:

BCAA  2008 5-year Hybrid Vehicle Cost Analysis

British Columbia Automobile Association

HOT SELLING HYBRIDS

Auto dealers in Canada and the United States are having trouble meeting soaring customer demand for fuel-saving  gasoline-electric hybrids.

Some dealers are reporting a four- to five-month wait for the Toyota Prius and about  a three-month wait on the Camry Hybrid.

Toyota Motor Corp., General Motors Corp. and Ford Motor Co. all say they are working hard to  produce enough hybrids to meet demand, but the supply of hybrid components is  posing a problem, among other things.

In Canada, the Power Information Network says it took dealers on average just 33 days to move a Prius off the lot, which is about half the so-called "turn rate" of all other vehicles. The Ford Escape Hybrid took just 23 days to turn in May, though the turn rate dropped to just seven days in February for Ford's sport-utility hybrid.

Toyota officials on both sides of the border say they are pushing for more hybrid  production, though the demand is acute in the U.S. Toyota is constrained by suppliers that build the many specialized components for its hybrid systems. They are all in Japan  for cost reasons.

But Toyota has announced plans to begin  producing the Camry Hybrid in Thailand  in 2009 and in Australia  in 2010. Toyota also is planning to ramp up hybrid battery production in Japan and is considering production of the Prius in North America.

Ford officials have said that demand for Ford Escape Hybrid (and its Mercury Mariner Hybrid twin sold only in the U.S.) is outpacing sales projections made at the beginning of the year. The Escape Hybrid is the  best-selling non-Japanese hybrid.

At General Motors, a battery recall disrupted production of batteries for its Saturn Vue and Saturn Aura hybrids. The recall forced GM to use  batteries intended for this year's models to replace those in the 2007 models.

J.D. Power and Associates said hybrid vehicle sales are expected to grow this year, topping 400,000 in Canada  and the U.S. combined.