Richard "Dick" Startz, University of Washington professor of economics

Gas prices are once again out of sight. And it's about time for me to replace my 15-year-old minivan. So, I'm thinking about buying a hybrid. Since the new car will take over the role now played by the family minivan, I'm considering a hybrid SUV. But is a hybrid worth the premium price?

With a couple of economists in the family, the discussion around the kitchen table is going to begin by scratching out some numbers on the benefits (buy less gas) and costs (pay more for the car) of going hybrid.

Our family doesn't put a lot of miles on the car each year. On the other hand, we keep our cars for a long time - the odometer on the retiring minivan has passed the 120,000 mile mark. A plain old gasoline SUV that I've been looking at averages 22 miles to the gallon, so over the life of the car we're talking about tanking up with 5,500, maybe 6,000, gallons of unleaded.

That leaves two more numbers I need: How much gas will I save with a hybrid and what should I figure for the price of a gallon?

I've seen one estimate of 38 mpg for the hybrid SUV. Running 120,000 miles at 38 miles per gallon will burn a bit over 3,000 gallons. A good guestimate then is that the hybrid will save me roughly 2,500 gallons over the life of the car.

Figuring the dollar value of saving 2,500 gallons is hard because gasoline prices keep changing. At the moment, the price is well above two dollars a gallon -- call it $2.45. Two thousand five hundred gallons times $2.45 per gallon comes to a saving of $6,125.

On the other hand, gasoline was more like $1.85 last month and the current price is the highest it's been in years. If gas fell back to $1.85, my saving would be more like $4,600.

The problem gets more complicated since we'll still be driving the "new" car years from now. Who knows what gas will cost a decade down the road. Do you think it will be higher or lower? Care to place a bet?

I sure wouldn't want to bet on the price of gas next year, let alone in 10 years. But there's a bunch of big money people who regularly place bets on the price of oil -- which is a close proxy for the price of gas -- in what's called the "futures" market. Investors agree on a price for a barrel of oil months, or even years, in advance. This "future" price is a rough indicator of what the markets think oil is going to cost down the road.

Using the forecast oil price for 2010 we can predict that the price of gas will fall from the current $2.45 to $1.75. At that price, my savings will be around $4,400. Any forecast about what gasoline will sell for in the future needs to be taken with a grain of salt, but at least I have an educated guess.

Let's call the benefit on the financial side $4,500-$6,000 for round numbers. On the cost side, I know I'm going to pay more for a hybrid. I'll get some numbers when I walk into a few dealerships, but I've heard the premium's likely to be around $6,000 -- especially if I want a model in short supply. Sounds like a hybrid won't pay for itself financially, but taking the fuel savings into account does cover a good part of the price premium.

In the end the financials are close enough to break even that they aren't going to be the deciding factor. Hybrids pollute less than conventional vehicles. So long as I only have to pay a little, not a lot, extra I think I'll go hybrid as my contribution to clean air.

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Dick Startz is Castor Professor of Economics and Davis Distinguished Scholar at the University of Washington. He can be reached at econcol@u.washington.edu.