13 ms·

I don't understand how this can happen. An equilibrium seems more likely to me. If massive amounts of people move to electric vehicles gas prices will fall. Th

by 99_00 6y ago

I don't understand how this can happen. An equilibrium seems more likely to me. If massive amounts of people move to electric vehicles gas prices will fall. This will make combustion vehicles more attractive. Also, government depends on all the taxes they put on combustion vehicles. As those revenues decline they may choose to get that money from electric vehicle drivers under the guise of 'congestion' taxes or such.

adventured 6y ago
Gas prices might temporarily fall as there is a very brief over-supply. Then the exact opposite will happen, gasoline will become more expensive as the economies of scale vanishes, refineries shut down permanently (never to be restarted, and no new refineries will be built), the market demand continues to dwindle, and on the cycle goes. Gasoline ends up as a largely niche fuel many decades out. And that's before we get to the obviously anti-fossil fuel era we're entering, where they will increasingly hammer fuels like gasoline with taxes, driving the cost up around the globe. Even if somehow the market didn't drive the prices up from the economic efficiency change I described, the taxes will regardless and that's guaranteed to occur.
- maxerickson 6y ago
  Gasoline is (something like) 20% of refinery outputs. I think a lot of that is coming out of upgraders, so there can be quite a decline in output before there's not enough gasoline refiners for there to be price competition. https://www.eia.gov/dnav/pet/pet_pnp_refp2_dc_nus_mbbl_m.htm https://www.eia.gov/dnav/pet/pet_pnp_refp2_dc_nus_mbbl_m.htm (the upgrading part matters because they can shift their production around a lot more than if they are just fractioning the crude)
- ogre_codes 6y ago
  Also, the cost to extract oil is higher in some regions and production will drop off as prices drop. Canadian sands oil and shale oil both cost about $40/ barrel to extract so there isn't a ton of room for prices to go down from here before big chunks of supply vanish.
DennisP 6y ago
Governments certainly have the power to screw things up, but also to accelerate things. If electrics take over so much of the market that gasoline gets super cheap, there won't be that much political resistance to a carbon price on gasoline, since most people are driving electrics anyway. Besides that, it's not all about fuel costs. Electric vehicles are fun, and generally low-maintenance.
- throwaway0a5e 6y ago
  >there won't be that much political resistance to a carbon price on gasoline, since most people are driving electrics anyway. So long as screwing people too poor to justify a new or new-ish car is politically unacceptable there will be some resistance. Cars from the early '00s are still on the road. It's gonna take another ~20yr for the fleet to turn over organically.
  - jlj 6y ago
    In the US there was a "cash for clunkers" program about 10-15 years ago that tried to clear out ineficient older model cars. It was fairly successful and stimulated purchases of newer cars. The downside was that some perfectly fine cars were scrapped. I suspect that gas stations will start swapping pumps for chargers, and that will motivate people to switch too. By the time this all happens though we will have more car sharing programs and maybe autonomous vehicles, so the ownership paradigm will be different in 2030 compared to now. Why buy a car that sits idle for 90% of the day?
    - djrogers 6y ago
      > I suspect that gas stations will start swapping pumps for chargers, and that will motivate people to switch too. This may happen some places, but I expect the charging infrastructure to ultimately look very different from the refueling one we have today. Today's fueling infrastructure is the way it is largely due to the difficulties of storing and pumping fuel safely (physically and environmentally speaking). There's no reason that an electric car shouldn't be able to 'refuel' at a restaurant, grocery store, or at work (ie, where we see most charging places pop up). Having four-corners real estate and employees dedicated for electric charging all over even city is just inefficient.
jlj 6y ago
Gas taxes set a floor for how low prices can go. They'll probably increase as gas motor cars are phased out before the process ever sink too low. In Washington, US, they increased the registration fee for electrics to make up for the shortfall in gas taxes that pay for road wear, congestion, etc. So that's already happening.
- 99_00 6y ago
  >They'll probably increase as gas motor cars are phased out before the process ever sink too low. Why?
  - Ericson2314 6y ago
    Because cars still have externalities, electrified or not. One just hopes that also increased thee gas tax too so as not to subsidize the ICE cars.
    - 99_00 6y ago
      If it's about externalities then there is a ceiling on the taxes. Because combination isn't infinitely bad. If it's about revenue, taxing combustion engines gets less attractive the smaller the market becomes especially if it's easy to switch.
      - kgwgk 6y ago
        And if it’s about revenue, which is obviously the reason why the tax exists at all, what we’ll see is that the taxes will follow the money . They’ll find a way to increase the tax on the use of electric vehicles.
  - jlj 6y ago
    Increased gas taxes would drive behavior change towards electrics. Similar to tobacco and alcohol taxes to discourage their use. I don't see diesel going away so soon though because of industrial, agriculture, and military use. It will probably be taxed differently according to it's use. In fact it already is taxed differently in the US for home heating, vehicle, and aviation use.
ogre_codes 6y ago
> If massive amounts of people move to electric vehicles gas prices will fall. This isn't entirely true. The cost of gas has a hard floor due to the cost of extracting oil from the ground. Nobody is spending $40 a barrel to extract oil that's selling for $25 a barrel. So if oil demand falls and prices fall, many of the current sellers pull out of the market entirely. On top of that, as the number of cars going to gas stations starts to drop, gas stations will get less profitable. As profits drop, stations start closing down. Eventually, enough stations close down and it becomes inconvenient to own and operate an ICE vehicle regardless of the cost of fuel.
- 99_00 6y ago
  >This isn't entirely true. The cost of gas has a hard floor due to the cost of extracting oil from the ground. Nobody is spending $40 a barrel to extract oil that's selling for $25 a barrel. So if oil demand falls and prices fall, many of the current sellers pull out of the market entirely. Not all producers have the same cost. Saudi Arabia is the cheapest I know of at $2.80 per barrel. Others can be 10 times higher or more. Is $2.80 the floor? Maybe not, since SA is a monopoly and can manipulate the price. I think the point is that we can both agree on is that it's a complex dynamic system, with lots of variables and interconnections, and it reacts to changes. >Saudi Aramco, the monopoly oil producer in Saudi Arabia, boasts an extraction cost of about $2.80 a barrel >A geographical comparison from the annual reports of four major international oil companies shows that production costs in Russia were about $22 a barrel https://www.washingtonpost.com/business/energy/by-pumping-at-will-saudi-arabia-hurts-oil-investment/2020/03/15/189505da-6693-11ea-8a8e-5c5336b32760_story.html https://www.washingtonpost.com/business/energy/by-pumping-at...
  - ogre_codes 6y ago
    Yeah, what I was trying to say is individual suppliers will drop out of the market as the price of oil drops. That in turn reduces the supply. For Oil Sands, that's roughly $43. Shale oil is similar. Every time the price drops, the number of suppliers drop. OPEC will fight to keep oil prices up by limiting supply when they can, since most of the governments in the Middle East are run on oil profits, they need to!
deleted 6y ago
[deleted]
mywittyname 6y ago
> If massive amounts of people move to electric vehicles gas prices will fall. This will make combustion vehicles more attractive. If gas prices fall any lower due to demand, then production capacity will probably disappear permanently, leading to shortages and a huge, long-term rise in price. Oil pumps aren't like taps that can be shut off and powered back on demand. They basically need to be operated continuously because restarting them is pretty expensive. And storing excess oil is also pretty expensive. We also have to consider that low gas prices are due to volume. Refinement is still costly, and if the volume of gas falls by a large amount, that refinement costs gets distributed among the remaining volume. Refinement capacity is even more expensive to bring back online than pumps. I predict gasoline production will death-spiral at some point. Gas stations will be culled as prices spike and volumes drop. I would expect this to happen in a relatively short timespan, over maybe 1-2 years for the bulk of it, then a long tail of persistent decline.
- davidhbolton 6y ago
  I think the petrochemical industry might disagree with you there. Sure petrol/diesel for transport will decline but pharmaceuticals, plastics and many more items are made that way and they are not going away. This site has a big list. https://www.ranken-energy.com/index.php/products-made-from-petroleum/ https://www.ranken-energy.com/index.php/products-made-from-p...
  - mywittyname 6y ago
    Per your own link, 50% of a barrel of oil goes to gasoline production. If by, "ultra-low sulfur distillate", they mean diesel fuel for road going vehicles, that increases the percentage dedicated to motor vehicle transportation to 75%. That is pretty staggering. If automotive transportation consumes somewhere between 50-75% of crude oil production, then the fallout from the reduction in that market is going to be very significant. There's no way that growth in the ammonia and rubber boots sector is going to be enough to capture the production excess left by EVs. Your link has me pretty well convinced that the gasoline market collapse will be swift and extreme.
rasz 6y ago
Remember that time photo film got cheaper as more and more people switched to digital cameras? Combustion engine powered cars will be relegated to hipsters, museums, hardcore enthusiasts and specialist/niche applications.
- 99_00 6y ago
  I'm not aware of a strong functional benefit of electric versus combustion. But digital cameras had strong benefits over digital, so I don't think it's a good analogy. In general, I don't think analogies are for making arguments, because people focus on the difference between the analogy and what it's being applied to, like I just did. In education, to teach a new principle, I think they are great.
  - rasz 6y ago
    Have you driven a Tesla or another fast electric car? They are the new digital cameras.
    - 99_00 6y ago
      How? What do they do that cheaper combustion cars don't?
      - username90 6y ago
        Accelerate faster than a combustion sports car, no expensive engine maintenance etc. And since the only major cost of electric cars is the battery they will go down in price as we get better batteries and very likely get cheaper than combustion cars pretty soon. Electric engines are super simple, only reason combustion cars are even competitive today is that we have invested so much research into building combustion engines.
        99_00 6y ago
        There are cheaper and faster combustion sports cars.
jeofken 6y ago
Exactly what is happening in Norway

by 99_00 6y ago

adventured 6y ago

Gas prices might temporarily fall as there is a very brief over-supply. Then the exact opposite will happen, gasoline will become more expensive as the economies of scale vanishes, refineries shut down permanently (never to be restarted, and no new refineries will be built), the market demand continues to dwindle, and on the cycle goes. Gasoline ends up as a largely niche fuel many decades out. And that's before we get to the obviously anti-fossil fuel era we're entering, where they will increasingly hammer fuels like gasoline with taxes, driving the cost up around the globe. Even if somehow the market didn't drive the prices up from the economic efficiency change I described, the taxes will regardless and that's guaranteed to occur.

maxerickson 6y ago
Gasoline is (something like) 20% of refinery outputs. I think a lot of that is coming out of upgraders, so there can be quite a decline in output before there's not enough gasoline refiners for there to be price competition. https://www.eia.gov/dnav/pet/pet_pnp_refp2_dc_nus_mbbl_m.htm https://www.eia.gov/dnav/pet/pet_pnp_refp2_dc_nus_mbbl_m.htm (the upgrading part matters because they can shift their production around a lot more than if they are just fractioning the crude)
ogre_codes 6y ago
Also, the cost to extract oil is higher in some regions and production will drop off as prices drop. Canadian sands oil and shale oil both cost about $40/ barrel to extract so there isn't a ton of room for prices to go down from here before big chunks of supply vanish.

DennisP 6y ago

Governments certainly have the power to screw things up, but also to accelerate things. If electrics take over so much of the market that gasoline gets super cheap, there won't be that much political resistance to a carbon price on gasoline, since most people are driving electrics anyway. Besides that, it's not all about fuel costs. Electric vehicles are fun, and generally low-maintenance.

throwaway0a5e 6y ago
>there won't be that much political resistance to a carbon price on gasoline, since most people are driving electrics anyway. So long as screwing people too poor to justify a new or new-ish car is politically unacceptable there will be some resistance. Cars from the early '00s are still on the road. It's gonna take another ~20yr for the fleet to turn over organically.
- jlj 6y ago
  In the US there was a "cash for clunkers" program about 10-15 years ago that tried to clear out ineficient older model cars. It was fairly successful and stimulated purchases of newer cars. The downside was that some perfectly fine cars were scrapped. I suspect that gas stations will start swapping pumps for chargers, and that will motivate people to switch too. By the time this all happens though we will have more car sharing programs and maybe autonomous vehicles, so the ownership paradigm will be different in 2030 compared to now. Why buy a car that sits idle for 90% of the day?
  - djrogers 6y ago
    > I suspect that gas stations will start swapping pumps for chargers, and that will motivate people to switch too. This may happen some places, but I expect the charging infrastructure to ultimately look very different from the refueling one we have today. Today's fueling infrastructure is the way it is largely due to the difficulties of storing and pumping fuel safely (physically and environmentally speaking). There's no reason that an electric car shouldn't be able to 'refuel' at a restaurant, grocery store, or at work (ie, where we see most charging places pop up). Having four-corners real estate and employees dedicated for electric charging all over even city is just inefficient.

jlj 6y ago

Gas taxes set a floor for how low prices can go. They'll probably increase as gas motor cars are phased out before the process ever sink too low. In Washington, US, they increased the registration fee for electrics to make up for the shortfall in gas taxes that pay for road wear, congestion, etc. So that's already happening.

99_00 6y ago
>They'll probably increase as gas motor cars are phased out before the process ever sink too low. Why?
- Ericson2314 6y ago
  Because cars still have externalities, electrified or not. One just hopes that also increased thee gas tax too so as not to subsidize the ICE cars.
  - 99_00 6y ago
    If it's about externalities then there is a ceiling on the taxes. Because combination isn't infinitely bad. If it's about revenue, taxing combustion engines gets less attractive the smaller the market becomes especially if it's easy to switch.
    - kgwgk 6y ago
      And if it’s about revenue, which is obviously the reason why the tax exists at all, what we’ll see is that the taxes will follow the money . They’ll find a way to increase the tax on the use of electric vehicles.
- jlj 6y ago
  Increased gas taxes would drive behavior change towards electrics. Similar to tobacco and alcohol taxes to discourage their use. I don't see diesel going away so soon though because of industrial, agriculture, and military use. It will probably be taxed differently according to it's use. In fact it already is taxed differently in the US for home heating, vehicle, and aviation use.

ogre_codes 6y ago

> If massive amounts of people move to electric vehicles gas prices will fall. This isn't entirely true. The cost of gas has a hard floor due to the cost of extracting oil from the ground. Nobody is spending $40 a barrel to extract oil that's selling for $25 a barrel. So if oil demand falls and prices fall, many of the current sellers pull out of the market entirely. On top of that, as the number of cars going to gas stations starts to drop, gas stations will get less profitable. As profits drop, stations start closing down. Eventually, enough stations close down and it becomes inconvenient to own and operate an ICE vehicle regardless of the cost of fuel.

99_00 6y ago
>This isn't entirely true. The cost of gas has a hard floor due to the cost of extracting oil from the ground. Nobody is spending $40 a barrel to extract oil that's selling for $25 a barrel. So if oil demand falls and prices fall, many of the current sellers pull out of the market entirely. Not all producers have the same cost. Saudi Arabia is the cheapest I know of at $2.80 per barrel. Others can be 10 times higher or more. Is $2.80 the floor? Maybe not, since SA is a monopoly and can manipulate the price. I think the point is that we can both agree on is that it's a complex dynamic system, with lots of variables and interconnections, and it reacts to changes. >Saudi Aramco, the monopoly oil producer in Saudi Arabia, boasts an extraction cost of about $2.80 a barrel >A geographical comparison from the annual reports of four major international oil companies shows that production costs in Russia were about $22 a barrel https://www.washingtonpost.com/business/energy/by-pumping-at-will-saudi-arabia-hurts-oil-investment/2020/03/15/189505da-6693-11ea-8a8e-5c5336b32760_story.html https://www.washingtonpost.com/business/energy/by-pumping-at...
- ogre_codes 6y ago
  Yeah, what I was trying to say is individual suppliers will drop out of the market as the price of oil drops. That in turn reduces the supply. For Oil Sands, that's roughly $43. Shale oil is similar. Every time the price drops, the number of suppliers drop. OPEC will fight to keep oil prices up by limiting supply when they can, since most of the governments in the Middle East are run on oil profits, they need to!

deleted 6y ago

[deleted]

mywittyname 6y ago

> If massive amounts of people move to electric vehicles gas prices will fall. This will make combustion vehicles more attractive. If gas prices fall any lower due to demand, then production capacity will probably disappear permanently, leading to shortages and a huge, long-term rise in price. Oil pumps aren't like taps that can be shut off and powered back on demand. They basically need to be operated continuously because restarting them is pretty expensive. And storing excess oil is also pretty expensive. We also have to consider that low gas prices are due to volume. Refinement is still costly, and if the volume of gas falls by a large amount, that refinement costs gets distributed among the remaining volume. Refinement capacity is even more expensive to bring back online than pumps. I predict gasoline production will death-spiral at some point. Gas stations will be culled as prices spike and volumes drop. I would expect this to happen in a relatively short timespan, over maybe 1-2 years for the bulk of it, then a long tail of persistent decline.

davidhbolton 6y ago
I think the petrochemical industry might disagree with you there. Sure petrol/diesel for transport will decline but pharmaceuticals, plastics and many more items are made that way and they are not going away. This site has a big list. https://www.ranken-energy.com/index.php/products-made-from-petroleum/ https://www.ranken-energy.com/index.php/products-made-from-p...
- mywittyname 6y ago
  Per your own link, 50% of a barrel of oil goes to gasoline production. If by, "ultra-low sulfur distillate", they mean diesel fuel for road going vehicles, that increases the percentage dedicated to motor vehicle transportation to 75%. That is pretty staggering. If automotive transportation consumes somewhere between 50-75% of crude oil production, then the fallout from the reduction in that market is going to be very significant. There's no way that growth in the ammonia and rubber boots sector is going to be enough to capture the production excess left by EVs. Your link has me pretty well convinced that the gasoline market collapse will be swift and extreme.

rasz 6y ago

Remember that time photo film got cheaper as more and more people switched to digital cameras? Combustion engine powered cars will be relegated to hipsters, museums, hardcore enthusiasts and specialist/niche applications.

99_00 6y ago
I'm not aware of a strong functional benefit of electric versus combustion. But digital cameras had strong benefits over digital, so I don't think it's a good analogy. In general, I don't think analogies are for making arguments, because people focus on the difference between the analogy and what it's being applied to, like I just did. In education, to teach a new principle, I think they are great.
- rasz 6y ago
  Have you driven a Tesla or another fast electric car? They are the new digital cameras.
  - 99_00 6y ago
    How? What do they do that cheaper combustion cars don't?
    - username90 6y ago
      Accelerate faster than a combustion sports car, no expensive engine maintenance etc. And since the only major cost of electric cars is the battery they will go down in price as we get better batteries and very likely get cheaper than combustion cars pretty soon. Electric engines are super simple, only reason combustion cars are even competitive today is that we have invested so much research into building combustion engines.
      - 99_00 6y ago
        There are cheaper and faster combustion sports cars.

jeofken 6y ago

Exactly what is happening in Norway