Guest Post by Eric Peters
One of the upsides to Coronavirus is downward pressure on the price of oil – helped further downward by a price war between some of the world’s producers. In my area – SW Virginia – the price of unleaded regular gazzuline has already fallen to just over $2 per gallon; it is possible it’ll fall to less than $2 per gallon before spring and that is more than just really good news for people who fill-up.
It is very bad news for people who charge up.
For the whole EV shibboleth, which has already given up on even the pretense of being the means by which driving costs are to be reduced. Remember that one? Back in the ’90s – when gas cost more than it does now – EVs were being developed as a way to get around the then-high and expected to get higher cost of gassing up.
But then the price of gas went down – while the cost of EVs didn’t. The whole EV thing seemed to be on the verge of going away when . . . just like all-of-a-sudden Iraq became the “enemy of freedom” after the country was supposedly attacked by Afghani religious fanatics – who turned out to be Saudi fanatics, if they weren’t something else entirely – it was suddenly all about EVs being the salve for a “climate” in “crisis.” 
And the emphasis shifted to how quick and sexy these EVs could be while salving the climate and signaling the virtue of those within.
Well, they’re about to pay more to signal, it looks like. Cheaper gas is a kind of reverse subsidy, only no taxpayers are being mulcted in the process. Or – put another way – it’ll be necessary to increase the subsidization of economically idiotic EVs, in order to keep them from piling up at railheads and distribution lots on account of their being fewer people willing to pay even more to virtue signal.
As The Kingfish used to say, now lookee here:
If gas goes down to say $1.75 per gallon that means a full 15 gallon tank costs about $25. If the car the gas goes into averages say 27 MPG – about average for a new car – that means it costs about $25 to go more than 400 miles, which is about twice as far as any new electric car equipped with its standard battery (you have to pay thousands more for the optional battery if you want to be able to go farther).
About $100 per month to drive the IC car about 1,600 miles. That’s cheap – which is something no EV that’s available can come close to competing with, even if you don’t factor in the ludicrous cost of the EV itself. If you do, the cost-per-mile disparity is wider than an astronomical unit and that doesn’t factor in the EV’s shorter useful service life (a function of the EV’s shorter battery life).
This could end up killing a lot more Teslas and Leafs and Bolts (oh, my!) than people.
Here’s to hoping!
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Remember $140 oil ? Gas was over $4.00 per gallon.
Now oil is $33.00, gas is still over $2.00 per gallon.
Does this math makes sense to anyone ?
gas price is not linear with barrel price. like everything the vig goes up. My property tax to house value ratio is greater then when purchased 3 decades ago.
We may see $25 oil if SA decides to take on Russia by increasing production.
Many states take advantage of low oil/gas prices to hike taxes. TN did it recently. Who is going to bitch if gas goes from $2.02 to $2.07?
The oil companies, and their bond holders.
And the banks.
You’d think low energy prices would be good for the economy, but not in our backwards financialized economy.
Watch some of the business shows and the low oil price is bad news and the culprits are “Russia!” and “Saudi Arabia.”
Low oil prices will wipe out the frackers which could wipe out some banks.
Tin Pat, credit card rates didn’t go down when interest rates went negative either.
Old Pangloss warned, never vote for a ‘temporary’ tax increase, it will never go down.
Our sales tax in Cali was 7% back in the 80’s until a convenient earthquake gave them the opportunity to raise it “temporarily” to almost 10%. Been that ever since.
it makes a lot of sense to Goldman Sachs, which owns the ICE, which quietly slid into the Enron slot when Enron went down, and has been privately taxing gasoline ever since.
Great stuff as usual, Eric! I always look forward to reading your articles!
The shale gas/fracking industry is built on shady bank loans given on false projections of high oil prices in perpetuity, and unlimited profit margins.
Dreams of big bucks from water filled holes have been shattered by the House of Saud trying to beat Russia to market.
These wonderful American business decisions by the banks and the entrepreneurial would-be oil tycoons they bankrolled will not be corrected by the market as the myths of America would so proudly proclaim.
Instead our tax money will be used to bail out their businesses and many others, under the guise of saving jobs when in reality only saving rich investors’ and banks’ profits.
Socialism for the Overclass will be in FULL EFFECT and in plain sight in the coming months. There will be no mortgage relief beyond maybe a month. There will be no other help. Only road blocks, and long lines.
Enjoy the cheap gas. I hope it’s the only economic effect of the virus we all feel.