CHEAP FUEL
Happy times are here again at the gas pump. The price of oil keeps falling, and Americans are filling their tanks for less than $2 a gallon. The government says cheaper gasoline put an extra $100 billion into drivers' wallets last year alone.
CHEAP FUEL
Arora analyzed government data, and found that what's changed is that the oil and gas industry as a share of GDP has about doubled in the past decade. Now it has grown so large that it's changed the basic equation of whether cheap gas is a good thing overall.
So far, there isn't a lot of evidence that the U.S. is getting dragged down by all the trouble abroad. Job growth remains pretty solid. The economic recovery is continuing. And some analysts think we might see a bigger boost from cheaper energy later this year.
Demand for these battery-powered vehicles was weak even before the coronavirus pandemic shut down the world. With nearly 36 million Americans out of work and fuel prices averaging $1.85 a gallon nationally, what does the future look like for EVs?
John Voelcker, a longtime electric car journalist and industry analyst, argues that fuel prices are rarely the reason Americans buy zero-emissions vehicles. EVs can be found charging at homes belonging to early tech adopters and the wealthy, he said, and rising fuel prices do not necessarily correlate to increased demand.
Even if consumers' appetite for EVs changes in the near future, few automakers are in a position to take on industry leader Tesla. More than 192,200 Teslas were sold in the U.S. in 2019, with the company's Model 3 sedan the most popular -- and cheapest -- model preferred by buyers. Sales of Chevrolet's Bolt totaled 16,418 units in 2019, followed by Nissan's Leaf (12,365), Audi's e-tron (5,369), BMW's i3 (4,854) and Jaguar's I-PACE (2,594).
Gasoline demand in the U.S. has recently ticked up 17.2% from a low on March 26 as more states began to lift stay-at-home orders. Patrick De Haan, an energy analyst with Gas Buddy, expects the upward trend to continue barring a second wave of infections. EVs, however, have not affected fuel prices the same way.
The U.S. Department of Energy proposed last year to provide cost recovery to coal and nuclear plants via payments for plants that had significant on-site fuel. The DOE reasoned these plants had been disadvantaged by subsidies given to renewable projects, in addition to costly regulations, and the retirements threatened the resilience of the grid.
"If cheap natural gas, growing wind generation, or lower electricity demand eventually lead to widespread retirement of existing nuclear plants, the net environmental benefits of these trends would be significantly reduced." Jenkins concluded.
The situation is hardly a happy coincidence for U.S. motorists. On the contrary, American fuel prices are kept down artificially by low gas taxes that fail to address the true social cost of driving. An international comparison of gas taxes shows the United States in back of the pack by a wide margin:
Gas prices may no longer be at their peak, but they remain higher than levels seen last year. And with inflation continuing to take a bite out of budgets elsewhere, finding cheap gas is a priority for many consumers.
Searching for the cheapest gas near you no longer requires wasting gas driving around to find the best price. There are now dozens of apps that do the legwork for you. Many of them compile gas price data in real time for users, allowing you to shop around for gas straight from your phone.
First and foremost, fuel economy standards act as a buffer against the volatility of oil prices. In fact, this was a key impetus in the origin of the original fuel economy standards as a response to the 1973 Arab Oil Embargo and ensuing price shock.
All of this speaks to the fact that strong fuel economy standards help create a stronger, more resilient economy. Using less gasoline helps free up money for consumers to spend elsewhere in the economy, where a greater share of that spending can be re-spent in the United States instead of being spent abroad. And of course this would have a concurrent impact on the additional costs to the economy due to trade imbalances and national security.
By 2030, the fuel economy standards on the books today will net the public about $350 billion each year, even after considering the costs of the technology used to reduce fuel use. That equates to about $2500 per household thanks to the 2012-2025 fuel economy standards put in place under the current administration. These savings are great for our economy, helping to translate into economic growth. We estimate this will improve GDP by between $25 and $30 BILLION by 2030, netting 650,000 full-time jobs in the process.
The fuel sale will only be available at participating Circle K locations in San Antonio, Houston, Dallas, Austin, Corpus Christi, Harlingen/McAllen, Texas (excluding locations in West Texas and the Panhandle). To find a participating location you can click here.
Biotech company LS9 launched in 2005 with great ambitions: founded by premier scientists and top-flight venture capitalists, it planned to genetically engineer microörganisms to make hydrocarbon fuels such as diesel cost-effectively from sugar.
LS9 has a demonstration facility in Okeechobee, Florida, that successfully produced diesel at low volumes, and it signed partnerships with larger corporations for testing. But it struggled to get the financing to build a large-scale facility, says David Berry, a cofounder of LS9 and investor at Flagship Ventures. Solazyme, which uses genetically engineered algae to make products from sugar, has a program to develop fuels for the U.S. military, but much of its commercial activity is making oils for personal care and nutritional products. Amyris, which makes an oil called farnesene that can be converted into diesel, sells small amounts of fuel for buses but has focused its business on making products such as moisturizers and fragrances.
You might be worried that because the Costco gas prices are low, the quality of the fuel may not be great. But just like with all of the Kirkland items they sell in their warehouse, the Kirkland Signature Gasoline is top quality. It meets top-tier gasoline standards with deposit control additives to deep clean engine components for the best possible engine performance.
But cheaper gas has does free up consumer budgets to spend more in other industries. Using data on credit card and debit card purchases of households, and looking at variations in spending among households that spent a little and a lot of their income on gasoline, and observing how spending patterns changed as gas prices fluctuate led the JP Morgan Chase Institute to predict that the bulk of savings from lower gas prices go to restaurant meals, groceries and entertainment.
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