Will you spend $20 for a gallon of gas?
2025 my wild guess....
If your talking real 2010 dollars, rather than nominal dollars at the time, I doubt it. But lets assume its true. Why should I spend a lot more on an electric car now, because of the price of gas in 2025? If the price in 2025 is going to be $1bil/gal it still doesn't effect my car buying choice all that much right now, (or it wouldn't if I was in the market for a car).
Lets pretend its going to be $20/gal this year. Would it then make sense for me to buy say a Chevy Volt? Well the Volt cost about $41K. I could get a small car with better gas mileage for long highway trips than the Volt for less than $15K. But lets say $16K so that I can get a nicer base car, or option out the cheap econobox. How much do I have to drive, in short trips only (since for long trips the Volt's MPG is only in the 30s), to make up for that $25K? Quite a lot. My most common short trip is an 8 mile round trip. Lets say the cheap car car gets 40 mpg and the Volt gets 120 mpg on such trips. That's 5 round trips per gallon ($4 per round trip with $20/gas), compared to 15 per gallon ($1.33 per trip). The difference in cost is $2.66 per trip. So I need to make about 9400 round trips to make up the difference. At 5 per week, 50 weeks per year, that would take me over 37 years to make up the difference. Of course that's not all my driving, so maybe it only takes 15 years. But then many people replace their car before 15 years roll around (and with electrics or even hybrids, you probably have to replace the batteries). Also the extra cost for the Volt has to be paid up front (likely financed, but then you pay the interest over time, and even if you can pay cash for it, time value of money has to be considered, you could use that money to pay other debt, or to invest, or for other purposes, money now is worth more than the same money in the future for many reasons, including the fact that you can't be sure you will be around in the future).
So even with $20 per gallon gasoline a straight gasoline car might make more economic sense than an expensive plug-in hybrid.
Which doesn't mean I have anything against hybrids (a Prius, might be a good competitor in this case, it would cost a bit more, but be larger and probably get slightly better gas mileage than the econobox), or even plug in hybrids; but the later is going to have to be cheaper before it makes sense.
You might reply with "they are getting cheaper", well maybe they will get cheaper. If they do maybe then it will make sense to buy one (esp. with more expensive gasoline), but it doesn't make a lot of sense now, at least nor in terms of cost (again I'm ignoring emotional or subjective benefits).
Of course some people drive a lot more. But if your making long trips than you can't use a straight EV, and something like the Volt gets pretty normal MPG. I suppose for the subset that drives the Volt just about as far as it can go on a charge each and every day, than it makes some sense with more expensive gasoline. With $20/gal gas, a Volt might make economic sense for a decent number of people, but even at that price, for many people (light drivers, or those who make lots of long trips). And for those who will fit the profile, well they have quite some time before they will see $20/gal gasoline even by your estimate.
In the end geologists predict that the vast majority of resources will be left in the ground because of "extraction costs".
That's almost certainly true. OTOH as prices get higher, and as technology and techniques improve, more and more oil and other fossil fuels become cost effective to extract. |
