Everyone is on the latest craze, driving a hybrid, because they're 1. thinking they're saving money on gas. 2. preserving the enviroment. 3. it costs cheaper to operate in the "long run". 4. privileged to drive in the carpool lane. If you pick no. 4, you're still wrong. Let's examine this "hybrid" phenomena one at a time, shall we? 1. Buy a Honda Civic Hybrid and your avg 15000mi/yr gas costs $959 @3.19/gal, but buying a standard Honda Civic and that same 15000mi/yr annual gas costs $1443, saving you an earth shattering $484/ yr and in 8 years, you will have pocketed a grand total of $3872. Wow! You paid $24,000 for your hybrid and the standard costs $14,000 that's $10000 that I could put into the bank at 4.15% interest compounded annually and I would get (guess what?) $3844 in interest in 8 years. So much for saving money on the gas. Why 8 years? that's when the hybrid battery typically gives out. After 8 years, you need a new one, and where does this battery end up? (you guessed it) So much for preserving the environment. After 8 years the standard Civic is probably still running at $1443/yr but the Hybrid needs a new battery! Anyone got an idea of how much a new hybrid battery costs? try $3600 for the battery part alone, add labor, and you might get out of the dealership (that's right only dealerships have the replacement batteries) with a $4500 total bill. So much for the long run. To top out this list of nuttiness, I always drive my BMW 328I in the carpool lane. In CA, the posted time restrictions are 6am-9am and 3pm-6pm. Common sense tells me to go to work at 5:30am and go home around 5:55pm. I've timed myself in driving during rush hour getting home around an hour later, to waiting around an hour before getting on the road, only get home around the same time compared to  rush hour driving. That hour of waiting I've put to good use, performing errands, banking, grocery shopping, reading, sleeping, and yes, buying gas. I've minimized my car use, by combining errands and my commute in one round trip. Most people after they get home, or during their lunch hour, get into their cars again to do errands. Why? I don't know. Go figure.
And for you diehard Prius fans coughing up around $26,000 to +$30,000, listen up, in 2004 Toyota made a 42mpg Echo for about $11,000. And for 2006, Toyota has the 40mpg Yaris for about $10,000. You do the math.

Addendum: I got a few accusatory replies to this guide regarding faulty math and faulty carpool info. I stand corrected: Not-for-profit Consumer Reports Magazine has in fact, in an unbiased feature, has confirmed my suspicion on the bad economics of owning a hybrid. As for the carpool lane info, Ebay member nugkaerf has corrected me in identifying southern california's different carpool lane enforcement times. I do know however, most carpool lanes are NOT restricted to 24hrs a day, but only during the posted times as I have mentioned above. I looked up the CA DMV's call on this and confirmed only during the posted times is there a passenger minimum. The only excpetion is Los Angeles county where it is enforced 24hrs/day, that's because there is no posted time. DUH!

Update: 9/17/2006 Sunday Times Parade magazine expresses the same sentiment, Hybrids are not a sound economic investment.

hxxp://www.smartmoney.com/consumer/index.cfm?story=20031126
hxxp://www.dmv.ca.gov/pubs/hdbk/pgs22thru25.htm#carpool
hxxp://www.mta.net/projects_plans/HOV/la_county.htm

Update for 2008 US News and World Reports questions the financial sense of owning a hybrid:

Does a Hybrid Make Financial Sense?

Posted: Apr. 24, 2008 10:04 a.m.

Looking to cut your energy costs?  The famous Toyota Prius, the symbol of eco-conscious consumers everywhere, may not be the best way.

Bloomberg's John F. Wasik explains, "Let's say you bought a stripped-down Toyota Prius for $22,000, received a $4,000 trade-in allowance and put $2,000 down. You also paid about $1,300 in sales tax. You then finance the balance, $17,300, at 6 percent annual interest for five years, resulting in a payment of $334 a month. You will eventually pay about $2,800 in interest on the loan. If you save $1,000 a year in gasoline costs, it will take you almost three years to recoup your investment."   In addition, "you may succumb to the buffet effect -- and drive more -- thus negating some of your savings and extending your payback period."  You might save more if you bought a Toyota Yaris or Honda Fit, which "retail between $12,000 and $14,000 for the basic models," and still manage mpg numbers in the low 30's.

Autoblog Green notes, "The Yaris is a lot cheaper but gets lower mileage. A driver who doesn't accumulate many miles may end up spending less in total payments and fuel costs and would have an incentive to drive less

In a separate post, Autoblog Green calculated how many miles you would have to drive a hybrid before it paid off.  Comparing hybrids to their non-hybrid counterparts, (the Honda Civic vs. the Honda Civic Hybrid, for instance,) they found that in every case, it would take more than 35,000 miles of city driving or 97,000 miles of highway driving to offset the cost of the hybrid upgrade.

This test has been done before, ad nearly every time the result is similar.  We would caution, however, that no one ever seems to include resale value in these calculations -- and last we checked, a Prius was still earning back more of its purchase price on resale than nearly anything else.

Still, maybe you would be better off in a Yaris.  You could always use the money you save to insulate your home and cut your carbon footprint there.

Compare hybrids to small cars yourself with U.S. News' car rankings and reviews.