If complacency could be bottled and burned, East Coast drivers would have no problem this week.
Things were being dumped by Teslas, Nissan Leafs, and every other electric vehicle, silently approaching past dry gas stations and frantic drivers filling all sorts of tanks with fast-running fuel. When the corpses turned to nylon bags, the justice of the pure, green observers no doubt reached the red line.
“It’s certainly a good time to be an electric car driver,” said Clemson University economist Matthew Lewis of his home in northwestern South Carolina. “There’s no gasoline around here at all.”
Gas stations are slowly filling their tanks this weekend, but will the failure of the colonial pipeline ̵
Historically, gasoline it’s not a very resilient product, which means that drivers aren’t very sensitive to price fluctuations – at least they’re not sensitive enough to change their driving habits or buy a greener vehicle. In fact, there is evidence that American drivers have become less sensitive to rising gas prices in recent years. A A 2006 study by economists at the University of California found a 10-fold decrease in gas elasticity between the late 1970s and early 2000s. The authors cite an increase in suburban development and commuting, combined with a decline in public transport; more efficient vehicles may also have played a role, economists say.
When oil prices fell in 2014, sales of hybrid cars also fell, suggesting a weak correlation, according to BloombergNEF. Acceptance speed of all-electric vehicles did not deviate, it remains stable, which suggests that the Tesla crowd is making purchasing decisions based on the environment and personal choice, not on monthly gas bills. This is not surprising given the average price of electric vehicles at the time; almost the entire product category falls into the luxury segment.
For almost every product, the elasticity of demand depends largely on two things: duration and alternatives. For the former, demand does not decrease unless price increases are expected to continue. This seems to be the case this week: Even as gas stations dried up, prices rose by only 4.8% in the last two weeks. IN $ 3.04 per gallon, the average price in the United States remains far lower than it was from 2011 to 2014.
A bullish economy – especially in a difficult labor market – tends to hit every penny pressing the pump. In general, when we work, we drive. When we earn more, we buy bigger, less efficient vehicles and drive more.
Electric miles can also dry out. Frank Volak, an economist at Stanford, noted that widespread power outages today are much more common than pipeline outages. In fact, energy managers across the Western United States are warning summer of eclipses, as extreme heat emphasizes that utilities stop dirty plants and switch to wind and solar energy.
What has changed is the second function in the elasticity equation: alternatives. With the most resilient products, consumers tend to have other options. Beef is a good example; if the steak spends, people turn to burgers or chicken. As for cars, there have never been as many alternatives to gasoline as there are now, and they have never been so affordable. During the oil crisis of the 1970s, the alternative to the long pump line was a bus ticket; today it is the Nissan Leaf, which can be new for $ 31,670 before any applicable discounts from the federal and state states or used to pennies to the dollar.
Moreover, potential car buyers have never been so EV-curious. About 4% of U.S. drivers “definitely” plan to buy an electric vehicle for their next purchase, and another 27% are heavily considering one, according to December Consumer Reports survey.
Jonathan Levy, chief commercial officer of EVgo’s charging network, believes the drama of the pipeline is accelerating the windfall for electric vehicles. The cleaner air that came from blocking COVID was another recent “yes” check for prospective electricity buyers, Levy said.
However, Nick Nigro, CEO of Atlas Public Policy, does not expect any immediate green shoots. But he said the pipeline bug “planted more seeds” than potential electric car drivers. “If we find ourselves in a place where wild fluctuations in oil prices are pointing up this summer,” Nigro said, “you can expect a complex effect.”
“This is a very unique event,” Lewis of Clemson said of the gas crisis this week. “There are a lot more people entertaining the idea who are about to get a lot more opportunities. For such people, this is new information. “