- Rising Gas Prices Could Boost California’s Electric Vehicle Market
- Customers have been lured towards cheaper charging of electric vehicles at home
- UK analysts say electric vehicle owners are ‘protected’ from rising fuel prices
The conflict in the Middle East, which has raged for more than a week now, has caused a spike in energy prices, from oil to natural gas, affecting both the cost of transportation fuel and national energy bills.
Some parts of the United States are feeling the effect more than others, with the average cost of a gallon of gasoline climbing Monday to $5.20 in California, compared to $3.47 nationally, according to data from the American Automobile Association (AAA).
The reasons are quite clear: the conflict has destroyed oil facilities that supply gasoline and diesel globally, while 20% of the world’s oil is shipped through the Strait of Hormuz, which has been effectively closed for a week.
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Although President Trump has claimed that soaring oil prices are a “very small price to pay” for global “peace and security” as the war in Iran rages, some experts believe they will continue to rise.
On Sunday, Patrick De Haan, head of oil analysis at GasBuddy, estimated there was an 80 percent chance the national average gasoline price would hit $4 next month. The U.S. average currently stands at $3.45, according to AAA (via The Independent).
The story is similar in the UK, where petrol and diesel prices have continued to rise since the start of the dispute, with the RAC’s Simon Williams warning that the situation for British drivers looks “increasingly bleak”.
Despite this, some researchers believe electric vehicle drivers remain “protected” from soaring fuel prices, with a new analysis from the Energy and Climate Intelligence Unit concluding that drivers of petrol and diesel cars will have to pay significantly more to fuel their vehicles.
The study, focused on UK consumers, said that if the price of a barrel of oil rises to $120, the price of petrol could rise to around 170p a litre, increasing annual fueling costs by more than £320 a year.
However, the ECiU says capping electricity prices until June in the UK “will protect electric vehicle drivers from current shocks”. While recognizing that the rise in gas prices should push up electricity prices from July.
Cheaper loading
Compare the Market analysis showed that electric cars cost on average £579 less in ‘fuel’ per year than petrol cars. All things considered, the average cost of running an electric car is £1,264, compared to £1,843 for a petrol car.
This figure was based on a UK motorist’s average annual mileage of 6,700 miles (fewer people commute to work) and paying £1.62 per liter for petrol or 28p per kWh for electricity.
The gulf between the two would be even greater if billing was done via off-peak energy rates.
Any rise in oil prices will only increase the average annual figure for owners of petrol or diesel vehicles, but energy suppliers in the UK have pledged to offer cheaper off-peak tariffs from July.
Intelligent Octopus Go, for example, allows electric vehicle owners to charge 7p per kWh during off-peak times. Even with a standard variable tariff, that’s still only around 25p per kWh, according to Ohme.
Compare costs on an average UK annual mileage of 6,800 miles and petrol owners pay £1,057, compared to standard variable rate chargers who spend just £437 and Intelligent Octopus Go users who pay just £119 per year.
The situation is similar in the United States, where the NRDC says it costs between $500 and $1,200 per year for home charging, which is significantly cheaper than the annual cost of $1,300 to $2,500+ to fill up a comparable gasoline-powered car.
This varies from state to state, depending on fluctuating gas and electricity prices, but even in the worst case scenario, it’s usually cheaper to charge at home than to fill up at the gas station.
Home charging is essential
The elephant in the room here is all those electric vehicle owners who simply can’t charge at home or at work — a group who will likely have to shoulder the rising cost of gasoline, which will likely be passed on to the consumer via the big companies behind public charging networks.
In the UK, electric vehicle owners have called on the government to reduce VAT on public charging, which would make charging cheaper and more accessible to those who cannot plug in at home.
Similarly, consumers support the deployment of lower-power road charging stations, which provide low-cost overnight charging of parked electric vehicles.
In the US, the cost of fast charging is not as astronomical as in the UK, averaging $0.49 per kWh, topping out at £0.80 per kWh, but it is still susceptible to the same market volatility.
Although the Trump administration eliminated the $7,500 tax incentive for electric vehicles, some in the industry say rising gasoline prices could spur a new wave of electric vehicle purchases, particularly in more exposed regions, such as California.
“We will likely see an increase in electric vehicle adoption and especially hybrid adoption if gas prices remain high,” Sam Abuelsamid, an automotive analyst at Telemetry Agency, told the LA Times.
“The last time oil prices were above $100 a barrel was in early 2022 and that’s when we saw electric vehicle sales really start to pick up in the United States.”
While they’re still not cheap to buy, the number of more affordable electric vehicles is growing, particularly in markets that have been receptive to new arrivals from China.
In the UK and much of Europe, there are now more choices than ever when it comes to modern electric vehicles costing £30,000 or $30,000 or less.
The Trump administration has created a hostile environment for electric vehicles in the United States, removing tax incentives and erecting tariff barriers that have arguably reduced the choice available to consumers.
Despite this, there are still cheaper electric vehicle options, including the Chevrolet Bolt at $28,995, Nissan Leaf at $31,535, Hyundai Kona Electric for less than $35,000, and Toyota’s popular bZ at $36,350.
Rising gas prices could be the incentive many U.S. consumers need to go electric, especially if they can free themselves from greater volatility with cheaper home charging.
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