The Cost of Owning a Car

The biggest cost of owning car is not the price of gasoline -- it's depreciation.

According to the Canadian Automobile Association (CAA), when you include gas, tires and general maintenance, a small car costs 16 cents per kilometre to operate.

A regular family van with a six-cyclinder engine is about 21 cents per kilometre.

And that only tells a small part of the story: Other costs, like insurance, lease or financing and depreciation can be two or three times as high as the actual cost.

Here's a breakdown based on buying a new car today and driving 18,000 kilometers a year.

We'll take a brand new vehicle -- a small car -- the Chevy Cobalt:

Take the insurance costs $1860

Yearly depreciation -- the really big number $3660

And financing charges on a car loan $942

That's a total of $6462

Divided that by 365 days of the year, this works out to $17.70 every day, even if it doesn't leave the driveway.

In our example, we add in $7.90 to operate the car to the $17.70. That means it's costing you a total of $25.60 a day. That works out to 51 cents per kilometer to drive a small car.

And when we worked out the same example for a Grand Caravan van it was 68 cents a kilometre.

To save on the cost of operating a car, keep your cars longer or buy used. Depreciation is the biggest cost of car ownership -- about half the total. Pay cash -- so you avoid leasing and financing costs.

Whatever you do -- don't skip maintenance even when your budget is tight. Skipping an oil change or other necessary work just costs you money down the road.

Do the maintenance that your owner's manual says to do -- not necessarily what the dealer recommends. The car manufacturer makes the manual and many dealerships have been trying to reduce necessary maintenance.

The Biofuel Effect

Crop failures, shortages and rising fuel costs are making your food more expensive.

But something unexpected is making it worse. Crops grown for bio-fuels are driving up the price of your bread.

"My car eats at the same place I do," says Kenji James Fuse. His car runs on bio-diesel made from used cooking oil collected from Vancouver Island restaurants.

"A bunch of us make our own," he explained. "It works in most diesel engines and home furnaces."

While using used oil makes sense, there isn't enough to feed a world hungry for bio-diesel. Fresh canola is used in European bio-diesel. Canada exports about half its crop --something Kenji finds offensive.

"It's misguided and not sustainable," he said.

The result, it's pushed the price of canola to record levels -- increasing the price of the canola oil you buy in the store and even higher prices are forecast next year.

Jim Vercammen, UBC professor of food sciences, says politicians might need to rethink some of their policies and how aggressively they're trying to push their economies into bio-fuels.

Meanwhile, demand for American ethanol has boosted worldwide corn prices. Farmers have switched from wheat to corn, putting pressure on wheat supplies and that pushes up the price of bread. It's all linked.

Some people worry bread could hit $10 a loaf.

"That's just fear mongering," dismissed Vercammen.

When wheat doubles -- bread doesn't double -- because wheat is only one part of the overall cost of making a loaf.

"So much of this is processing, and storage, and advertising, and everything else.

That raw ingredient price doesn't have the impact here in the developed world, like it would have in the developing world," said Vercammen.

An even more significant factor may be how we react to fears of shortages or price rises.

Remember in 2006 when cloudy water in Vancouver caused people to rush out and over buy bottle water? We ran out. The shelves were empty.

That can happen with any food item if we over-buy out of fear.

"It's like a run on the bank. If everyone stays calm about it in a system that is more than capable of dealing with the problem but if everyone just panics, they will just create a problem; self fulfilling," said Vercammen.

And shortages, even artificial ones, cause higher prices.

Forecasts by Agriculture Canada show wheat and pasta prices peaking this year and dropping next due to much larger world supply. That's the good news.

The bad news is while prices will be lower than this year's record, they'll still be the second highest ever.

With a report from CTV British Columbia's Chris Olsen