Our Obsession With Gas Prices Is Driving America Nuts

If electric vehicles will be good for one thing, it’s ending the dead-end politics around gas prices.

Moveable explores the future of transportation, infrastructure, energy, and cities.

Every morning for the last few months, White House chief of staff Ron Klain wakes up and checks gas prices. This is the opening anecdote from a Politico story that ran under the headline “The White House has one problem that rules them all: Gas prices.” The article also says a team of “economic specialists” at the White House undergo a daily “painstaking, state-by-state examination of gasoline prices and the intricate market forces pushing them relentlessly upward.”

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The entire article is worth reading as a snapshot of politicians attempting to exercise command and control policies on a free market-driven global commodity even though they know they have no actual control over it. But they also know they’re going to get hammered in the midterms because many voters are mad about gas prices. The end result is one of the highest-ranking executive office staffers wakes up every morning and thinks about gas prices. 

The U.S. is addicted to gasoline and, like any addiction, it is pitiful stuff that’s difficult for everyone involved. Fortunately, there is a solution right around the corner. Electric vehicles are ready for mass adoption, and it could finally put an end to this sad, destructive American addiction. 

I say this as someone who is often skeptical of the way EVs are presented as a societal savior. I don’t think EVs will save us from the climate crisis or fulfill any of the other utopian promises some EV boosters forward, especially if we’re mostly replacing big dumb gas cars with big dumb electric cars. EVs are better for the environment but not good for it. But one practical benefit of widespread EV adoption will likely be ending pointless gasoline price politics which get us nowhere.

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In economic jargon, gasoline demand is relatively inelastic but prices are unstable. Like most economic jargon, these complicated words explain things we intuitively know: U.S. residents need to buy gasoline even though the price is all over the place, leading to widespread frustration and powerlessness, two emotions that often result in people acting in desperation against their own interests. So all we can do is watch and hope gas prices go down. And we do a lot of watching. Virtually everyone knows what the price of gasoline is per gallon, thanks to those big roadway signs. 

Meanwhile, almost nobody knows what their local utility charges per kilowatt-hour of electricity, even though everyone uses electricity, too. Part of this discrepancy in price awareness is because there aren’t giant roadside signs advertising the local electricity rates. But another key reason is because the price of electricity doesn’t fluctuate nearly as much as the price of gasoline, so there’s no real reason to be hyper-aware of it. We know roughly how much we spend on electricity every month, budget for it, and otherwise think little of it. People do freak out when electricity rates spike, but it happens so rarely it’s not a big concern like gas prices constantly are.

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We can see this difference quite clearly in historical price charts. Here is a chart of the average retail gasoline price in the U.S. from 2002 to the present from the U.S. Energy Information Administration, a government agency: 

Credit: EIA

And here is the corresponding chart of electricity prices during the same time period:

Credit: EIA

One is the chart akin to a healthy person’s regular heartbeat, the other a person in cardiac arrest. Right now, the U.S. transportation sector is heavily reliant on the cardiac arrest chart. EVs provide a pathway to get us onto the healthy person’s chart.

Like any broad discussion about energy prices, there are of course caveats. As with gasoline prices, electricity rates vary in different parts of the country. The EIA page has all kinds of fun charts to play with, but the upshot is electricity prices are generally pretty stable. Electricity prices in Connecticut and California are about 20 cents per kilowatt-hour, which is quite high, whereas the Pacific Northwest has some of the lowest rates in the country of around 9 cents per kilowatt-hour because they mostly use hydroelectricity generation from dams. 

To be sure, electricity prices go up and down, but they do so in regular seasonal adjustments along with usage, and not by very much year-to-year. It is rare for electricity rates in any state to change more than 10 percent year-to-year, whereas gas prices fluctuate that much as a matter of course. Buy a gas car in 2022 and you’re signing up for another decade or so of the cardiac arrest price chart. Maybe gas will go back down to $3 or less at some point. Maybe it will stay at $6 or climb higher. Who the hell knows! 

But buy an EV and not only will you be paying less to power your car overall, you can be relatively certain that cost is not going to dramatically change. While gasoline and diesel prices have increased by some 34 and 49 percent since January respectively, electricity prices have only increased about five to eight percent. More renewable energy and battery storage systems will likely help make electricity costs more predictable and cheaper over time.

It is often difficult to have sensible conversations about gas prices. Many Americans expect gas to always be cheap and blame politicians when they aren’t. It has been this way since the 1970s and the first oil crisis. In trying to sell EVs to the American public, car companies and politicians would do well to highlight that not only is electricity cheaper than gas, but it is also structured in such a way that you don’t have to wake up every morning worried about what price it will be.

Tagged:

electric vehicles, Moveable

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