Why are we consumed by gas prices? We use gasoline to fuel our vehicles and get around every day, and these prices are in our faces.
You can’t pass a gas station and not see the price. In fact, if you’re into “Dad Jokes,” you’ve likely seen a station with no price in the sign and made the silly comment, “well, I guess gas is free today.” Of course, you know, as well as everyone else that it’s not. This consumable item is something we depend on for our transportation.
The price of fuel is ingrained
Your parents and grandparents saw gas prices go up and never come back down. Some of them can tell you about a time when gas was less than $1.00 per gallon, which seems impossible today. Inflation causes increased prices of everything. Strangely though, the price of gas is plastered everywhere we go. We see this price advertised on the main sign for the station, letting you know what you’ll pay when you get there. Because it’s right in front of us and easy to see on any road, noticing and commenting on these prices has become ingrained in all of us.
Why have prices risen?
Inflation is cyclical, and we were due for a rise in prices. Unfortunately, when inflation hits and prices go up, salaries don’t tend to rise at the same rate. This is why we see so many people complain about how much less they can afford to buy at the grocery store compared to only a couple of years ago. The prices are up, but their budget didn’t change. When you think about the prices impacting people today, what are they talking about? Mostly, gas and eggs. Gas is always a discussion, but eggs have risen to a point where people are posting satirical videos of wealth being tied to how many eggs you have.
Global events immediately impact fuel costs
It’s only been a year since Russia waged war on Ukraine. As soon as this event began, the price of fuel at the pump increased dramatically. In the United States, we don’t receive much of our fuel from foreign countries, and Russia is pretty low on that list, but our prices still increased. Why? Oil is priced globally, not regionally, which caused our prices to increase, even though we don’t receive much of our oil from foreign countries.
Thankfully, current gas prices are close to where they were before the Ukraine war began, but could those prices decrease with the expansion of EVs?
Oil companies have seen the writing on the wall
Some might remember sitting in school classrooms with an actual chalkboard and a teacher writing the lessons on that board. Others are younger, and their instructors used whiteboards with dry-erase markers. Either way, sometimes the lesson isn’t clear until the writing is up on the wall. Oil companies have understood there’s a shelf-life to their place in the market for more than a decade.
EVs aren’t the reason for declining reliance on gasoline
There are more cars on the road than ever before, but that doesn’t mean more fuel is being produced. Gas prices might have leveled off recently, but fuel production leveled off in 2007. This is when increases in fuel production virtually stopped altogether. At this point, oil companies realized there would be a slowly declining need for their products, which gives them little to no incentive to refine more crude oil into gasoline. What happened in 2007 that caused such a shift?
The change that took place had nothing to do with electric vehicles hitting the road. In 2007 there were very few EVs on the road, and those were mostly gimmicky models with short driving ranges. The change was an increase in fuel mileage across new vehicles. If the entire fleet of vehicles on the road can squeeze more miles out of each gallon of gasoline, drivers don’t need to buy as much as before. As older cars were replaced with newer, more efficient models, gasoline consumption decreased, causing oil companies to put a cap on fuel production.
As you can see, this halt wasn’t caused by EVs.
No new refineries
The movement away from gas-guzzlers to hybrid, PHEV, and more efficient smaller-engine vehicles put a cap on the production needs from oil refineries. Because of this movement and the increased number of EVs heading to the market, we won’t see any new refineries built in the United States. In fact, some of our existing refineries have begun to rely on experts to replace the lowered demand in the U.S. This means our refineries are now exporting fuel to other counties. Of course, we still have the nagging question of whether or not more EVs will help decrease gas prices.
Will more EVs cause gas prices to decline
The long answer to this question is we’ll eventually see the cost of a gallon of gasoline decrease, but not for a long time. Until the supply of fuel grossly outweighs the demand, these prices aren’t likely to fall. Oil companies have been preparing for this time since 2007 and continue to understand the dwindling market for their product. Of course, that market won’t completely disappear anytime soon. Most automakers turning to EVs don’t have a solid plan to build only EVs in the next few years, which keeps gas and oil strong for the time being.
Will gas continue to be sold at pumps
There may be a time in the future when instead of talking about gas prices every time we pass by a station, we’ll talk about the price of electricity at a public charger. At this time, it’s possible we won’t even have gas stations on every corner any longer. Similar to leaded gasoline, we might have to find this fuel at a specialty shop. That time is not likely to occur in the next ten or fifteen years, but it’s possible and could be what we experience as the automotive world transitions from internal combustion engines to electric powertrains.
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