Diatribes of Jay

This blog has essays on public policy. It shuns ideology and applies facts, logic and math to social problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear.

16 November 2021

Electricity Rules the Road


For brief descriptions of and links to recent posts, click here. For an inverse-chronological list with links to all posts after January 23, 2017, click here. For a subject-matter index to posts before that date, click here.

One thing the MAGA-hat crew doesn’t get is basic economics. They don’t have a clue that the gasoline-powered muscle cars and trucks they love are already obsolete.

Gasoline now costs around $4.50 per gallon in California, and close to that in other states. At a respectable mileage of 30 MPG, that’s 15¢ per mile. In contrast, an average Tesla gets over four miles to the kilowatt-hour of electricity, for which the average US price is 10.59¢. So the Tesla costs 2.65¢ to drive a mile, or 12.35¢ per mile less than a gasoline car or truck.

Over a hard-driving 50K-mile year, that’s a saving of $6,175. It’s enough to bring the relative price of the cheapest Tesla Model 3, which sells for $37,990, down to $31,815 after one year and $25,640 after two. And for every year of driving after that, the relative loss gets $6,175 worse.

Is that price differential going to change? Probably not in the right direction for gas-lovers. Why? Because the Russians and the Saudis have learned how to manipulate global oil prices to their advantage.

Remember that iconic high-five between Vladimir Putin and MBS at the 2018 G20 meeting? Commentators thought maybe they were celebrating getting away with murder, or at least benefitting from it. (The high-five came not long after the dismemberment of Jamal Khashoggi, a journalist who had criticized MBS. It also followed poison attacks, which the Brits suspected Putin of approving, that had killed a Briton and harmed a renegade Russian spy and his daughter.)

But the G20 conference wasn’t about suppressing dissidents, let alone murder. It was about economics. Apparently Putin and MBS had something less bloody and more serious to celebrate. They had learned that, as key oil producers, their nations could control the global market for oil to their mutual advantage and suck the rest of the world dry.

For a time, the US had managed to break their grip. It used fracking technology to squeeze the last drops out of its depleting oil fields. It even managed to find some new fields suitable for fracking.

But fracking is a high-cost technology. It costs a lot more to drill a bunch of wells, and to pump them with fluids to fracture the rock and extract oil, than it does just to drop a few wells into the type of huge, near-surface oil pools that the Saudis and Russians have. Not only that, their non-fracked oil is among the “lightest and sweetest” in the world. It costs less to refine into usable fuels.

So simply by cooperating and controlling global production, the Saudi-Russian-OPEC combine can control the global market for oil. They can produce enough to keep the price low enough to make fracking uneconomic, but not so much as to reduce their own high profits. This ploy causes frackers to put their drilling rigs in mothballs, and their crews to take jobs elsewhere. The expense of starting up again increases the price gap between fracked oil and OPEC oil even more.

The Saudis and the Russians can do this for a long time. The cost advantage of producing their cheap oil over fracked oil, let alone the tar-sands muck that comes from Canada, is durable. Using their near-surface pools of “light, sweet” crude, they can control the global oil market, sideline fracked and tar competition, and gobble up the profits from most of the global market.

Two things are clear. First, the price advantage of Saudi-Russian-OPEC oil will endure for as long as their reserves last. Although the per-mile price differential between gas and electricity might not necessarily go up much more, unless there’s another pandemic it’s pretty sure not to go down. Second, the price of electricity is likely to be far more stable than that of gasoline, because almost all of our electric energy comes from domestic sources, either renewables like solar, wind or hydroelectric power, or natural gas, of which we have plenty. We’ve even begun (imprudently) exporting our own natural gas now.

So people who buy big gas-guzzlers now are chumps. They are facing cost disadvantages as far as the eye can see. And they are putting their economic fates in the hands of Putin and MBS. Good luck with that!

Yet that’s still not all. There’s maintenance, and there’s performance.

Over a dozen years ago, I wrote a blog post about the ten or so systems that an internal-combustion car has that an electric car doesn’t. I won’t recap that post here. But just consider that an electric car has no pistons, rings, crankshaft, camshaft, valves, radiator, transmission, fuel pump, distributor, spark plugs, exhaust pipe or muffler. Therefore it requires none of the maintenance that all these systems require. And most electric-car drivers recharge their cars at their homes, so they don’t need to “gas up” on the road, except on long trips.

About the only parts of an electric car that require replacement during its normal life are the tires, the windshield-wiper blades, and the brake linings. But even the brake likings require replacement less often, because electrical regenerative braking means they get a lot less use in an electric car.

As for performance, let’s not prolong the agony. I’ll just quote this passage from a MotorTrend discussion of the high-end Tesla Model 3:
“The Model 3 Performance is Tesla’s equivalent to a BMW M3 or a Mercedes-AMG C63. One of our staffers has spent a year with a Model 3 Performance, and when we tested that car, it launched to 60 mph in just 3.0 seconds. That’s quicker than either of the aforementioned German competitors, not to mention our long-term C8 Corvette.”
If they had had the brains, I suppose the dinosaurs would have thought they were impressive, too. They were so much bigger, more powerful and faster than those little mammals scurrying around in burrows. But it looks as if electric cars, like those little furry mammals, are ready to own the future now.

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