I reside in a crowded city with abundant public transport and scarce parking, which is why I don’t possess a car. Consequently, I’m frequently completely unaware of the present gasoline prices.
However, with the intensification of the situation in Iran, fossil fuel prices have experienced significant fluctuations, and I’ve begun to take notice. As of March 25, average gas prices in the US are $3.98 per gallon, rising from below $3 prior to the onset of the war.
Online, there seems to be a kind of excitement surrounding this volatility from certain individuals, including EV owners—some of the social media updates and opinion pieces have almost appeared jubilant. The underlying message is “I told you so.”
Don’t misunderstand me—this could represent a chance for EVs to gain traction globally. However, there are numerous reasons even those of us without cars should be alarmed by a continuous increase in fossil fuel prices.
significant opportunity for Japanese car manufacturers, whose cars often fit this category better than those made by US companies.
We are already witnessing early indicators of increased interest in electric vehicles. One online car marketplace in the US reported a 20% rise in search traffic for EVs following the first attack on Iran. For popular models like the Tesla Model Y, traffic nearly doubled.
The enthusiasm is international. A car dealership outside London mentioned it is struggling to cope with demand and is dispatching staff to procure more EVs at auction, according to Reuters. Another dealership in Manila informed Bloomberg that they received a month’s worth of orders in just two weeks.
The current timing in the US is especially intriguing, as we are on the brink of seeing a surge in more affordable used EVs entering the market. Three years ago, a leasing boom was initiated by the Inflation Reduction Act, which provided incentives for EVs, including leasing options. Approximately 300,000 of these leases are due to expire this year, leading many of those vehicles to be available for sale, thus increasing the stock of affordable used EVs.
Interest is present, but what would it truly take for more drivers to transition?
Nice, round figures often capture people’s attention. Some indicate that $4 per gallon (which the national average is nearing currently) is a critical point. At that price, the total ownership cost for an EV is significantly lower than that for a gasoline car, even with high electricity rates, according to figures from the energy consultancy BloombergNEF.
On the flip side, perhaps that won’t be sufficient: A survey by Cox Automotive discovered that a majority of US consumers would contemplate switching to an EV or hybrid if gas prices reached $6 per gallon.
However, this also marks the second significant instance of fossil fuel volatility in the past five years, which might make consumers more inclined to switch, as Elaine Buckberg, a senior fellow at Harvard, expressed to Bloomberg. (The first occurred in the summer of 2022 when Russia invaded Ukraine.)
I work as a climate and energy journalist, and I am invested in combating climate change. Hence, I’m always glad to see people transitioning to EVs or any alternative that helps reduce greenhouse gas emissions.
Nonetheless, one factor that seems to be overlooked in this discussion is that persistently high fossil fuel prices will adversely affect even those of us who are free from the constraints of vehicle ownership. Fuel expenses account for around 50% to 60% of the cost of transporting goods overseas. The production of fertilizers today relies on natural gas, which has become significantly more costly since the conflict began, especially in Europe.
Jet fuel prices have virtually doubled in the past month, as reported by the International Air Transport Association. Given that those prices make up roughly a quarter of an airline’s operational expenses, this could soon elevate the cost of air travel—and anything that is shipped by air.
If all of these factors culminate in an economic downturn, it will adversely impact large projects that require financing (even wind and solar installations) and for individuals seeking to borrow funds for purchasing a home or a vehicle (including an EV).
If you are considering buying a car, perhaps this uncertainty is what you needed to explore electric options. But until we can genuinely decarbonize not only our transportation sector but the entire economy, even this carless journalist will remain anxious about high gasoline prices.
This article is from The Spark, MIT Technology Review’s weekly climate newsletter. To receive it in your inbox every Wednesday, sign up here.
