3 ms·

Here in SF, electricity prices are $0.41/kWh while gas is ~$4.0-6.0 (depending on time of year and whether you are filling up regular or premium). So even $0.64

Here in SF, electricity prices are $0.41/kWh while gas is ~$4.0-6.0 (depending on time of year and whether you are filling up regular or premium). So even $0.64/kWh seems quite competitive in California and gas prices are unlikely to lower until relations with Russia normalize and sanctions lift (seems unlikely but a Trump victory might change things). People make these kinds of decisions based on the feeling of conditions today + people also care about the environment and view electric cars as better for that (i.e. multiple decision axis and the price of the EV is going to matter more than the cost of fuel).

nradov 3y ago
Sanctions on Russia and US presidential politics have no significant impact on gasoline prices in California. Russian petroleum exports haven't been cut off, just redirected towards neutral countries like India and China. Crude oil is a (mostly) fungible commodity so from a world market standpoint it doesn't matter where the oil is going as long as it gets out somewhere. The USA didn't import much Russian oil even before the war. Gas prices are high in California almost entirely due to state government policies: taxes are the highest in the country, no new refineries have been approved for many years, and the CARB mandates a unique blend which isn't produced in significant quantities anywhere else (and which does little or nothing to reduce overall pollution relative to other blends). https://ww2.arb.ca.gov/our-work/programs/fuels-enforcment-program/california-reformulated-gasoline https://ww2.arb.ca.gov/our-work/programs/fuels-enforcment-pr... https://taxfoundation.org/data/all/state/state-gas-tax-rates-2023/ https://taxfoundation.org/data/all/state/state-gas-tax-rates... Longer term we might see some reduction in Russian crude oil exports because they have been under investing in exploration and infrastructure maintenance. Their system is slowly breaking down without the support they used to receive from more competent foreign oil companies. But that isn't impacting the current market yet.
- vlovich123 3y ago
  And yet Russia’s invasion of Ukraine sent gasoline and crude up: https://www.wsj.com/articles/why-gas-prices-expensive-11646767172 https://www.wsj.com/articles/why-gas-prices-expensive-116467... https://fredblog.stlouisfed.org/2023/10/the-ukraine-wars-effects-on-us-commodity-prices/ https://fredblog.stlouisfed.org/2023/10/the-ukraine-wars-eff... There’s also been global inflation since then for various reasons, not least of which is that destabilization in Europe has ripple effects. It’s not the sole reason, but it’s a big one and energy markets are tied even if the commodity is different (e.g cut off natural gas to Europe & their demand for other sources of energy goes up & higher prices there means higher prices for their goods and refineries). Prices have come down because Biden released strategic oil reserves to combat higher prices. Your explanations explain why gas is higher in California than the rest of the country, but fails to explain why it’s also higher US-wide and globally. And yes, it does matter how the fungible commodity gets out - if India / China were a better price, Russia would have been sending their crude there in the first place. That means India / China is more expensive whether it’s because it has to be shipped a longer and more expensive route or because the partner’s form of payment is not as valuable (e.g. Russia tried accepting the Rupee for oil payments for a while but has since stopped). So yes, while there are headwinds that mitigate the impact, there is still a negative impact to price. Anyway, my main point was that there are geographic locales where EVs are cheaper regardless of whatever local and geopolitical factors are involved.

nradov 3y ago

Sanctions on Russia and US presidential politics have no significant impact on gasoline prices in California. Russian petroleum exports haven't been cut off, just redirected towards neutral countries like India and China. Crude oil is a (mostly) fungible commodity so from a world market standpoint it doesn't matter where the oil is going as long as it gets out somewhere. The USA didn't import much Russian oil even before the war. Gas prices are high in California almost entirely due to state government policies: taxes are the highest in the country, no new refineries have been approved for many years, and the CARB mandates a unique blend which isn't produced in significant quantities anywhere else (and which does little or nothing to reduce overall pollution relative to other blends). https://ww2.arb.ca.gov/our-work/programs/fuels-enforcment-program/california-reformulated-gasoline https://ww2.arb.ca.gov/our-work/programs/fuels-enforcment-pr... https://taxfoundation.org/data/all/state/state-gas-tax-rates-2023/ https://taxfoundation.org/data/all/state/state-gas-tax-rates... Longer term we might see some reduction in Russian crude oil exports because they have been under investing in exploration and infrastructure maintenance. Their system is slowly breaking down without the support they used to receive from more competent foreign oil companies. But that isn't impacting the current market yet.

vlovich123 3y ago
And yet Russia’s invasion of Ukraine sent gasoline and crude up: https://www.wsj.com/articles/why-gas-prices-expensive-11646767172 https://www.wsj.com/articles/why-gas-prices-expensive-116467... https://fredblog.stlouisfed.org/2023/10/the-ukraine-wars-effects-on-us-commodity-prices/ https://fredblog.stlouisfed.org/2023/10/the-ukraine-wars-eff... There’s also been global inflation since then for various reasons, not least of which is that destabilization in Europe has ripple effects. It’s not the sole reason, but it’s a big one and energy markets are tied even if the commodity is different (e.g cut off natural gas to Europe & their demand for other sources of energy goes up & higher prices there means higher prices for their goods and refineries). Prices have come down because Biden released strategic oil reserves to combat higher prices. Your explanations explain why gas is higher in California than the rest of the country, but fails to explain why it’s also higher US-wide and globally. And yes, it does matter how the fungible commodity gets out - if India / China were a better price, Russia would have been sending their crude there in the first place. That means India / China is more expensive whether it’s because it has to be shipped a longer and more expensive route or because the partner’s form of payment is not as valuable (e.g. Russia tried accepting the Rupee for oil payments for a while but has since stopped). So yes, while there are headwinds that mitigate the impact, there is still a negative impact to price. Anyway, my main point was that there are geographic locales where EVs are cheaper regardless of whatever local and geopolitical factors are involved.