Low Gas Prices in US Continue to Hamper Electric Vehicle Sales

4 years ago by Eric Loveday 15

Really Cheap Gas There

Really Cheap Gas There

Dave Hurst, principal analyst with Navigant Research, a consulting firm that provides in-depth analysis of global clean technology markets, says the US has a pricing issue that prevents electric vehicles from being as successful as previously predicted.

If Gas Were This Expensive, Then...

If Gas Were This Expensive, Then…

No, it’s not the price of electric vehicles, but rather the price at the pump.  As Hurst states:

“The challenge continues to be the fact that gas prices are low in the U.S.  And if you have low gas prices it makes it a challenging economic decision to move away from gas.”

The problem, it seems, is that gas prices in the US have not risen as forecasted, but instead seem to be dropping.

Gasoline in the US averages $3.50 a gallon nationwide.  That’s down substantially from 2012 when US gas averaged $3.90 per gallon.  These unrealistically low gas prices don’t provided buyers when enough incentive to move away from fossil-fueled automobiles.

As Hurst points out, gas in Canada averages $4.76 per gallon, which is still cheap compared to the average price paid per gallon of gas across the whole of the European Union (EU).  What’s that figure?  Are you sure you’re ready for it? Okay, it’s…$7.60 per gallon.

At that price, consumers are definitely inclined to seek out vehicles that reduce or eliminate the need for gas.  Is an exorbitant price similar to that EU figure needed in the US to spark the grand electric vehicle revolution?

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15 responses to "Low Gas Prices in US Continue to Hamper Electric Vehicle Sales"

  1. Bonaire says:

    Perfect time to raise gas taxes as they should be. Europe is high due to high gas taxes, so is Canada. We can help the whole national debt through a slight raised gasoline tax – by about .15 per gallon. Keep diesel as it is and tax the gasoline at the federal level and use the monies for roads projects or other debt-related goals.

    1. Nelson says:

      I 100% agree.

      NPNS!
      Volt#671

      1. kdawg says:

        Yep, it’s obvious the world didn’t explode when gas was $4/gallon, so a small gas tax increase isn’t going to be the end of us. I’d actually push for bigger #’s, but at this point, I’d settle for anything. I’m surprised individual states haven’t been increasing their taxes to pay their debts. Michigan is relatively high, considering we are a Midwest state, but check out how low VA is. Maybe they should increase their gas tax before charging EV’s more registration $.

        http://taxfoundation.org/article/state-gasoline-tax-rates-2009-2013

        1. Brian says:

          Wow, NY is the highest and NJ is the third lowest. No wonder there’s such a huge difference across the border. I mean, I always knew that it was b/c of taxes, but I didn’t realize we were at such different extreme ends of the spectrum.

        2. Mark H says:

          Yeah NC and SC are just like NY and NJ. NC 8 SC 47. With Charlotte nearly on the border there is a lot of travel across for gas, fireworks, you name it! One less thing to worry about with an EV. Kdawg you ARE the king of graphs.

  2. Nelson says:

    If the only reason you’re thinking of buying an EV or EREV is to save money on the price of gas you really need to take one on a test drive.

    NPNS!
    Volt#671

  3. David Murray says:

    Yep. I think if more people knew what it was like to drive an EV, they’d switch for the experience. And I think as more manufacturers increase the acceleration performance of their EVs in the coming years, more people will switch for that reason.

    The funny thing is, at $3.50 per gallon, I don’t think of gas being cheap. I started driving in the 1990’s and gas was still less than a Dollar per gallon. So just because gas isn’t “as high” as it was last year, does not mean its cheap. We’ve all simply re-adjusted to the cost and changed the meaning of normal. And we all know it is temporary. Gas goes up, gas goes down. But the long-term trend is always up.

    1. kdawg says:

      It appears 1998/1999 was the cheapest gas when you account for inflation.

      http://inflationdata.com/Inflation/images/charts/Oil/Gasoline_inflation_chart.htm

      1. Brian says:

        It figures that’d be the case. That’s exactly when I started driving, so now that <$1/gallon is engrained in my memory. "Why, back in my day, you could buy gas in any town you came to, and it cost less than $1/gallon!"

      2. Warren says:

        And that is precisely when we used the most.

        http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M

        If we raised gas to the EU price right now, there would be a huge increase in the sale of electric vehicles like mine…electric bicycles. 🙂

  4. Anderlan says:

    You can buy a used Leaf or lease a new one with an everyman’s monthly payment ($150-250) letting you drive 90% of your miles at $1/gallon and even 30cents/gallon (using nighttime baseload that’s ordinarily mostly wasted). Gas has got to go WAAAYYY down to even start to compete with decently priced electrics. The oil and gas bastards’ only hope is to kill the tax credit.

    1. Dave R says:

      “The oil and gas bastards’ only hope is to kill the tax credit.”

      By the time that happens production volume of EVs should be high enough that manufacturers will be able to reduce the price accordingly…

  5. Voice of Reason says:

    Raising gas tax will not happen. Republicans are against any tax increase. Democrats are against this tax increase because it will affect the poor. Bottom line is that there is no way the lower middle class and below are going to afford an EV. Yet they drive the same amount. Democrats telling the lower class that maybe they need to take the bus or ride a bike for the greater good ain’t gonna happen.

    Reminds me of the time a few independent lawmakers in Wisconsin tried to raise tobacco tax by $1 for health care initiatives. The left wing of the democrats from Milwaukee and Madison screamed bloody murder because, it will dramatically affect the poor in their districts. Apparently the rich people smoke much less than the poor people in Wisconsin. Republicans didn’t even speak and the bill died.

    1. kdawg says:

      “Bottom line is that there is no way the lower middle class and below are going to afford an EV.”
      ——————-
      I would not use the phrase “no-way”. I think EV’s are pretty cheap now. You can buy a Smart EV for $17K after the tax rebate, or $25K before. And more & more EV’s are showing up in the used market at very low prices. This doesn’t even factor in the much cheaper operating costs.

      Also to raise gas prices, we could just stop subsidizing the oil industry. Increased costs would be reflected in the price. That should make both parties happy (except the ones that get paid by oil lobbyists).

      This all may be moot anyway as China keeps buying cars, and the rest of the BRIC keeps using more oil. Supply/demand will take over.

  6. Open-Mind says:

    This is interesting.

    http://www.thegatewaypundit.com/2012/02/video-flashback-obama-and-dems-blast-bush-for-gas-prices-in-2008/

    When an “R” is in the white house, $3.50 gasoline is considered crazy expensive, and probably the result of unfair profiteering that’s driven by some right-wing conspiracy.

    When a “D” is in the white house, $3.50 gasoline is considered too cheap, and it would be great for the country if it was even more expensive.