Electric Cars And Oil Prices

Has anyone else noticed that every time electric cars seem to be on the verge of becoming widely available, the price of oil drops precipitously? So we’ve got the Tesla, the Nissan Leaf, electric versions of Ford Focus and Honda Fit (available mostly in Calif. I believe) and so on, not to mention not-quite electric cars like the Chevy Volt and plug in hybrids. How many of these cars will flop, and innovation be stifled, due to falling gas prices? Who’s going to want to pay a premium for a range limited car like the Leaf when gas drops below $2 a gallon? So, a few years from now, when the production is shut down and the research & development has been shelved, gas prices will shoot back up over $4 a gallon again - wanna make a friendly wager? :slight_smile:

I’m not suggesting there’s a grand conspiracy to manipulate oil prices to kill the electric cars. I understand there are worldwide economic forces of supply and demand which dictate fuel prices, and one could argue that economic slowdown in China along with the soon to come oil from Iran are depressing prices, but it sure seems like every time electric cars are about to take hold, gas prices plummet. I’m just hoping to start an intellectually stimulating discussion since this forum seems to have a high quantity of intelligent people who like to post.

Incidentally, I followed the recent thread about how cheaply used Leaves’ can be had. I think a used Leaf would make an excellent replacement for my current daily driver, but for the fact that I will be changing jobs in the next 6 - 12 months and have no idea how long my new commute will be.

I don’t know but it seems strange that the Saudis are increasing their output at a time of diminished demand. I suspect trying to bankrupt the North Dakota fields. I don’t how how to view the whole Iran thing except they are licking their chops hoping to cash in on their oil. Of course the low prices aren’t helping Russia right now either. But I don’t trust any of them particularly the folks in DC, sad to say.

Do the research, there are lots of data available on the internet. Show us a coorelation graph between EV sales and gas prices.

Lacking this, my guess is that the EV sales are so low that the oil producers don’t even take that into their calculations. After all, the electricity for the EVs comes from oil and coal to a large extent. (renewable is too erratic to count, and the hydro and nuclear are fixed in output, so the excess needed has to come from coal or oil)

The Saudis and the rest of OPEC want to shut down high cost oil fields, plain and simple. They want to lower the oil price to below the cost of production of these facilities, around $50 per barrel.

That will increase the OPEC market share of a market that is now not growing as fast as predicted.

However, some OPEC members are also suffering because the Saudis, with the lowest production cost, are taking most or all the increase in market share, leaving the rest with lower prices and lower overall revenue.

OPEC members rely on oil exports to drive their economies, unlike other countries, like the US and Canada. So Venezuela in particular is really suffering.

My guess is that they will gang up on Saudi Arabia to share some of that increase. If not, OPEC will be severely divided.

OPEC has been artificially manipulating the oil market since the '70s. Perhaps before that. Its members also have been cheating on one another since the '70s. Perhaps before that. They’ll be doing so long after I’m worm food. There’s nothing new about oil price manipulation by producers by artificially controlling supply independently of demand.

I honestly don’t believe the advent of electric cars has any effect at all. It’s pure politics and economic games among oil producing nations.

Wind generators are springing up everywhere. On our recent trip west, we saw acres of land with wind generators. Even here in east central Indiana, the next county east of where I live has big “wind farms” generating electric power. I think the nation is gearing up for more electrically powered transportation where the power is not generated by fossil fuels. I use an electric lawn mower powered with a,rechargeable battery. I may,start insecting the amps going into the charger to make certain they were generated by a wind turbine generator.

See what I mean? Good points so far. Although <$50 barrel oil will hurt high cost US oil fields (Bakken, shale oil), could render the controversy over the Keystone XL pipeline moot (for now), cheap oil seems to hurt a lot of countries unfriendly to US too (Russia, Iran, Venezuela). Makes you wonder what kind of machinations go on behind the scenes. However, Occam’s razor would suggest the simplest explanation is probably the correct one, so I’m gonna agree with Docnick here, the Saudis want to shut down the high cost producers - - - then they’ll turn down the spigot. Anybody here think gas prices won’t be back up to or over $4 a gallon in a few years?

Well, to tie it back into my original topic: So if an almost new Nissan Leaf can be had for $8,000 today, if gas prices skyrocket in 3 - 5 years, you might be able to sell it for as much as, or more than, it cost, especially if they stop making them in the meantime.

Honestly, gas would have to get to significantly more than $4 a gallon in order for me to consider an electric car, back 8-9 years ago when gas was around $4.40 a gallon. I commuted about 40 miles a day in vehicle than got that around 9-10 MPG. I didn’t complain because I knew and understood that my choice of vehicle was going to get poor fuel economy. And frankly, I’ve always had vehicles that favored performance/capability over fuel economy. That’s just my personal choice.

As for electric cars. Here’s what it’s going to take in order for me to consider one

  1. Performance equal to a ICE equivalent model. Most electric models are pretty close and some like the Tesla are actually quicker than most gas powered models

  2. I want to be able to run the HVAC, radio,etc. at full tilt and still get 350 miles or more of range at 70-85 MPH. This is isn’t a reality yet, but I suspect in another 3-5 years it will be doable

  3. The ability to recharge the battery in around 30 minutes, and have the infrastructure to do it. The technology isn’t there yet and a robust infrastructure won’t happen overnight.

  4. A price premium similar to that of a diesel model (around $2k-$4k) per car

The political situation in the Middle-East gets more unstable everyday…Sooner or later it will blow wide open, an all-out ground war involving the entire region, and oil prices will be back over $100/barrel overnight…

I would buy a Nissan Leaf just for the fun of owning one if I bought a used one for the right price. I almost bought a used Citicar back in the early 1980s just to see how it would do for my mile trip to work. I did buy a Black and Decker battery powered mower from a friend last year just to see how well it would do. I really prefer it over my gasoline mower because it is quiet.
I would have a real problem if I was offered a used Austin Healy Sprite and a used Nissan Leaf at the aame price.

Yeah, even when I was paying $500 a month for gas I thought more about finding a weekday room or a way to retire than buying a different car-especially electric. Just is not versatile enough for me or most I think. It fits a very small niche of the traveling market. They have to do more than just save gas in the city. Need to hold cargo, pull a trailer, go long distances, etc. or they end up just a third or fourth specialty vehicle like a golf cart sitting in the garage. IMHO.

I don’t think there’s much connection between electric cars and the price of gas. Electric cars aren’t necessarily about saving money. People who buy them with that goal in mind aren’t particularly well informed.

I have a friend who leased a Leaf a couple years ago. They have a family of 3 in a 1100 sq. ft. house. We have a family of 4 in a 2700 sq. ft. house. Since they bought the Leaf their electric bill rivals ours, sometimes it’s more. But electricity is cheap and relatively stable in price, not nearly as volatile as gasoline prices.

Electric cars are about using less gasoline and reducing tailpipe emissions. They are quite successful at that, regardless of price.

Speaking of performance, Consumer Reports bought a Tesla S Sport and found that it didn’t run 0 to 60 in 3.1 seconds as advertised. It only completed the distance in 3.5 seconds. Still, that’s pretty good.

EV’s are so few and far between that I don’t think OPEC is really worried about them, for now. The hybrid technology that allows gasoline cars to get around 50 mpg probably hits them harder.
I think hardest hit will be states that rely largely on gas taxes to fund highway and road construction. EV’s pay no gas tax and high gas mileage vehicles pay less than cars used to contribute. What’s the answer? I don’t know. There has been talk about taxing all vehicles per mile driven, effectively turning all our roads into toll roads. Or maybe just more toll roads period.

One thing I have noticed about toll roads, they get built, fast. Texas state toll road 45 from 130 to I-35 went from surveyor’s stakes to open for traffic in less than a year. It takes them longer just to build a new off ramp on I-35. Maybe it’s the efficiency of the private market, who can order a load of materials without having to bid it out first and then having to wait for the approval of some bureaucrat before they can proceed.

Also factor in the fact that only 43.4% of the oil goes to gasoline.

EVs are along for the ride, so to speak. High oil prices combined with the shale revolution creation of 3 million barrels a day of new US crude on the world market. That’s the key to the price collapse. Now everyone’s producing as much as possible to offset lower prices, driving them lower.

++1 to @Docnick, the Saudi’s had a great gig going, oil production cost less than $20 a barrel and selling for $120+ a barrel. When oil prices were high, the high cost fields in the US were worth going after, giving the Saudis competition. They did not like that, so they dropped the price to push the high cost producers out. It does not seem to be working; the high cost producers have been making improvements to drop the cost. That makes sense. All producers are now pumping out more oil to keep their revenue up, that model can’t be supported for very long. I expect to see some of the weaker producers start dropping out soon.

I have also heard that Saudi Arabia is flooding the market with oil to deny huge oil profits to ISIS. It’s not all about us.

Just as an aside, road projects are bid out and then done by private contractors to complete. They don’t have to bid out their operations again once they’ve got the contract. So same as for toll roads but some of the toll roads I’ve been on aren’t all that well maintained. At any rate they are all done by privates except for very small maintenance items like signs and patches. There are only so many contractors available though so some of it depends on how many other projects are going on at the same time.