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Sounds like a good move. I would look into an economical gas car.
A couple years ago I compared my Mazda3's fuel mileage with TDIs, and even though the diesel can beat my gas Mazda in fuel mileage, when I looked at the cost per operating mile compared with the TDIs, my Mazda came out on top by a pretty good margin.
The added fuel mileage for the diesel did not make up for the added cost per gallon for diesel.
Besides, as you noted, gasoline doesn't smell nearly as bad.
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