Electric cars have been gaining high demand over the years. This is mainly owing to the advantages they offer the environment.
According to research conducted by the US Department of Energy, National Renewable Energy Laboratory, and Idaho National Laboratory, electric cars can save up to $14,500 on gas costs over 15 years.
While this is an advantage that is beneficial to electric car owners, this article discusses how electric cars affect gas prices, gas stations, the oil industry, and the future of gas. Join us as we dive in.
This Is the Answer to How Electric Cars Affect Gas Prices:
How electric cars affect gas cars is uncertain so far. However, it may increase, regulate, or reduce gas prices depending on certain factors, such as the rate of electric car adoption among buyers, availability of government incentives, accessibility to EVs, and gas prices.
Will the Rise of Electric Cars Push Gas Prices Up?
The rise of electric cars may push gas prices up. However, using the fundamental economic principle as a basis, a rise in the price of a certain commodity is possible if it has a low supply but high demand. Gas prices will rise if the demand for it is higher than the supply.
However, in certain situations where electric cars see an adoption that is greater than gas cars, it will eventually lead to a greater supply than demand of gas. Such a case will cause a decrease in the price of gas, while gas stations may suffer a loss.
Some gas stations may need to shut down, while others have to struggle to stay in business. The shutdown of many gas stations may eventually cause a scarcity of the gas commodity, where car owners have to travel many miles to get gas.
However, the gas stations in business need to stay in business but can only do that if they can make enough profit. In such a case, the few gas buyers will have to fill the financial gap for the few gas companies in the business. They can only do this by increasing the price of gas.
However, we should note that another fundamental economic principle is that an increase in the price of a certain commodity leads to a decrease in its demand. So far, America has experienced a high gas price rate in the first three months of 2022. June was another month that saw an increase in gas prices this year.
Just like this basic principle, the reaction of many gas buyers was to change to electric cars to cut the expenses on gas. Thus, we can say the increase in gas prices where there is an alternative will only lead to more car owners leaving gas cars for electric cars.
However, if electric car adoption persists and the cost of gas continues to rise, this will only lead to a continuous drop in gas demand. But even if gas gets more expensive over time, can EV makers meet the demand of all potential customers? Highly unlikely.
Could Electric Cars Make Gas Cheaper?
Electric cars can make gas cheaper. Electric cars’ whole reliability on electricity makes them the ideal alternative to gas cars.
This is because of their ability to fully satisfy the same needs as gas cars. Alternative Fuel Data Center (AFDC) supported this by stating that electric cars can dramatically reduce the cost of fuel price because of their high-efficiency components.
Also, owing to another economic principle that states that in a market where an alternative exists to a particular good, an increase in the price of such goods will only cause demand for the substitute to rise.
We have seen this happen some months back when an increase in gas prices that made many customers subscribe to electric cars. If electric cars continue to see high adoption and the quest for car companies and the government to make them affordable to everyone gets accomplished, many will continue to switch to electric cars.
This will lead to a further decline in demand for gas. And will eventually lead to its excess supply over a long period.
However, we should mention that aside from government regulations, the drop in gas cars can also make them the go-to option among car owners. Thus, gas cars may compete with electric cars in the future if they can get cheaper to run than electric cars.
How Else Could Electric Cars Affect Gas Prices?
Electric cars can also affect gas prices by stabilizing them. Experts have claimed gas cars are up to five times more expensive to run than electric cars, thus encouraging the adoption of electric cars.
Also, twice this year, there has been an increase in the price of gas. And also this period has recorded higher sales of electric cars in America compared with other periods. According to Coxautonic, electric vehicles saw a 13% increase with a sale of 196,788 during this period.
We can say electric car adoption not only decreased the demand for fuel but is likely a factor that helps stabilized the fuel price so far.
Another way electric cars can affect gas prices is by putting a limit on the rise. High electric car adoption could help limit the spike in gas prices to an extent.
The choice to switch when there is an increase in gas prices is enough reason to ensure gas prices do not pass certain limits. Because going beyond an affordable limit will only encourage electric car adoption among car owners.
How Is the Electric Car Industry Affecting the Oil Industry?
The sale of EVs has been seeing increasing demand, even though it is not steady. So far, some oil and gas companies are investing in the electric industry.
According to Offshore Technology, the oil and gas companies are leading the way in electric vehicles, with oil companies such as Shell and others being the companies with top electric vehicle investments. Offshore Technology further stated these companies are dominant players in the electric vehicle space.
With oil and gas companies investing and leading in electric vehicles, we can say for certain that the oil and gas industry is already seeing a gradual loss of potential investors.
It is clear electric car is a great threat to the oil industry with this current development. With the rising adoption and government incentives of electric cars, the gas industries may find it difficult to attract new investment. Because of this threat, Politico reported that oil-backed groups have challenged the plans of electric car companies in 10 states already.
Will Gas Still Be Available After 2035?
There will still be gas after 2035. While electric cars would have seen great adoption by this period, it does not mean it will be the end of gas cars. So far, the only proposition made by state laws is to eradicate the sale of new gas cars by 2035, while people can still buy the used models.
One of these states is California and a few others so far. However, there is a significant possibility that other states will also join in over time to encourage the high adoption of electric cars.
We should note that while these states are proposing to ban the sale of new gas-powered vehicles in the future, they are not proposing to ban the sale of used gas cars during this period. This may be the case if other states are going to adopt this measure, too.
Also, so far, reviews on gas have only reported a reduction in gas usage in the future owing to the growing adoption of electric cars and not total eradication.
Thus, we believe gas will still be available after 2035, as some gas cars will still be on the road by then and they need fuel to move.
What Will Happen to Gas Stations as Electric Cars Take Over?
When electric cars take over, many gas stations will probably go out of business. To stay in business, there have to be other uses for gas aside from car consumption.
According to EIA, in 2021, the American consumption of gas mounted about 135 billion gallons in total. However, 138.83 billion of these gallons were finished motor gasoline, while just about 0.18 billion were finished aviation gasoline. It further stated about 58% of total gasoline consumption went to the transportation sector as of 2021.
With transportation consuming over 50% of the total gas for motor gasoline, electric cars taking over will immensely affect gas stations.
While they may not see total disappearance, gas stations may see a high reduction. However, they can’t be extinct because fuel usage is not limited to gas cars alone. Recreational boats, electricity generators for emergency power supply, and some construction equipment all use gas to function, too.
- Use of gasoline – US Energy Information Administration | eia.gov
- Revealed: the oil and gas companies leading the way in electric vehicles | offshore-technology.com