Whether a hybrid is right for you depends on your needs and also your perception of value. You'll pay more for a hybrid than its conventionally powered counterpart. You may or may not make up for this extra cost in fuel savings over the years. But recapturing the added cost of a hybrid is not necessarily the primary motivation for purchasing one. The ability to thumb one's nose at high gas prices every time you fuel up is a powerful attraction all its own. And despite the newfangled components, hybrids drive and handle just like any other conventionally powered passenger vehicle.

In 2004, the U.S. consumed 25 percent of the world's oil.

Economics aside, gasoline/electric hybrids appeal because they reduce fuel consumption. Conserving fossil fuels, such as gasoline made from petroleum, is crucial because fossil fuels are non-renewable, meaning that once we've used up the Earth's supply, that's it, no more. In 2004, the U.S. produced 9 percent of the world's total petroleum output, held 2 percent of the world's crude oil reserves, but consumed 25 percent of petroleum produced globally, according to the U.S. Department of Energy’s most recent data. That's a staggering consumption rate of 20.5 million barrels of oil per day.

Meanwhile, the amount of oil the U.S. imports is at a 31-year high, with 57.8 percent of petroleum consumed by the U.S. in 2004 coming from foreign sources, according to the DOE. It's not hard to see why many large companies in the automotive industry and others are increasingly focusing not only on hybrid-electric technology, but also on alternative-fuel sources such as hydrogen and ethanol, both of which are renewable.

And let’s not forget the other crucial hybrid advantage: extremely low emissions. Hybrids produce lower emissions in several ways, one of which is by splitting power between an internal combustion engine and an electric motor, thereby reducing fuel consumption and tailpipe emissions simultaneously.

Hybrid vehicles shut down their internal combustion engines in idle traffic.

Another way that hybrid vehicles help reduce pollution — arguably the one with greatest impact — is by shutting down their internal combustion engines in idle traffic, which is when exhaust emissions and fuel consumption are at their highest (you get zero miles per gallon in a gridlock). Some, like Toyota's Prius and Ford's Escape Hybrid, even leave the gasoline engine off at low speeds, relying solely on power from efficient electric motors for motivation from a standstill up to around 25 mph. In California and certain Northeast “green” states (Massachusetts, New York, Vermont and Maine) that have adopted California’s more stringent emissions regulations, hybrids are also equipped with near-zero evaporative emission fuel systems, which drastically reduce the toxic emissions that evaporate from gasoline in the car's fuel tank and fuel lines.

Not so long ago, the environmental advantages of conserving fuel and reducing exhaust emissions represented the primary reason many buyers would step up to cutting-edge and comparatively pricier hybrid vehicles. That’s changed with spiking gas prices and concerns about dependency on "foreign oil," both of which are spurring interest in fuel efficiency. Together, the dual advantages of higher fuel economy and lower emissions present a compelling case for considering a hybrid as your next vehicle.

There are other financial incentives as well, in the form of federal income tax credits. Any gas/electric hybrid vehicle bought after Dec. 31, 2005 for personal use is eligible for a federal income tax credit of up to $3,150. The amount of the tax credit depends on which vehicle you buy. See the chart below for a list of credit amounts for current 2007 model year vehicles.

Source: IRS

According to the Environmental Protection Agency's website, all vehicles must be purchased on or before Dec. 31, 2010 to be eligible for the credit, but the credit may end sooner for some vehicles than others. Hybrid tax credits will be phased out for vehicles offered by a given manufacturer once that company has sold a total of 60,000 eligible hybrid and lean-burn vehicles starting in January 2006.

Beginning with the second calendar quarter after the manufacturer has sold 60,000 eligible vehicles; the credit will then drop to 50 percent of the full credit amount for two calendar quarters, then to 25 percent for the next two calendar quarters. After that, the incentives for vehicles by that manufacturer will end. Toyota/Lexus passed the 60,000 vehicle threshold in mid-2006, so all incentives for the Camry, Highlander, Prius, GS 450h and RX 400h hybrids were halved for vehicles placed in service after Sept. 30, 2006. Reduced incentives are reflected in the amounts listed in the above chart.

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