Gas has to cost $3 a gallon before it affects vehicle choice, study says

Via GCR: http://www.greencarreports.com/news/1108400_gas-has-to-cost-3-a-gallon-before-it-affects-vehicle-choice-study-says

“With gas prices projected to remain under $3 per gallon over the next couple of years, we would look for fuel economy to remain at or near the bottom of the top 10 reasons to purchase.”

The survey of new-car buyers says chief reasons for buying a vehicle include quality and value for the money. Only 4% cited fuel economy in 2016.

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IMO, while people will start to seriously think about MPG again when the national average of a gallon of regular hits $3.00, it won't be until it hits $3.25 or more likely $3.50 that we'll start to see a major shift in buying patterns, and AFV sales will take off. If it ever gets to $4.00 average, which it only did very briefly during the price spike in 2008 ($4.11, when oil topped out at $147/bbl), it will become a tidal wave. California will be affected first, owing to our having the highest prices in the nation (outside Hawaii), plus our generally longer commutes.

The conclusion is flawed. There is no sharp line like that - below $3 and it doesn't affect vehicle choice, $3 or more and it does? Silly.

It's not only the price of gas, but how quickly we got there. 12 years ago, $3 gas would have pushed a lot of people into the still-new Prius. Today, $3 feels "cheap".

There's definitely a sharp line. In '08 when gas was over $4/gal for the first time ever, the roads became empty. At least in my area. I was a delivery driver during that time and was on the roads every day all day long and it was like a switch, $4/gal and people stopped driving except if they absolutely had to. I had a picture, I don't think I have anymore, but it was of I-25 in the middle of Denver on a mid-week afternoon around 1pm or so and there were no cars coming or going anywhere to be seen at least 1/2 mile in front and behind me, both sides of the interstate all 10 lanes.

And that number is a moving target too.

People were getting used to $4 gas and starting to buy trucks again,
the drop in gas prices helped move us into a place where for the first time trucks outsell cars
and the car market is basically collapsing to irrelevance.

Then we will hear all the bitching once gas "surprisingly" goes up to $4 a gallon again.

The government should have "supply side" taxes that hold a certain floor on crude prices, when the crude per barrel rate goes up the tax goes away, this would also help end the road funding bitching since supply side is unavoidable.

Ah well

Should have started phasing a carbon tax when crude came back down. Still should now. Canada just did. Europe always has.

GetOffYourGas said:

The conclusion is flawed. There is no sharp line like that - below $3 and it doesn't affect vehicle choice, $3 or more and it does? Silly.

It's not only the price of gas, but how quickly we got there. 12 years ago, $3 gas would have pushed a lot of people into the still-new Prius. Today, $3 feels "cheap".

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To quote the article:

The market-research firm identifies $3 per gallon as the point at which car buyers begin to cite the cost of fuel as a major purchase consideration.

Over the past 10 years, fuel economy, more than any other purchase consideration, has climbed up and down the importance scale. It has soared like a rocketing pheasant to No.1 any time gasoline exceeds $3 a gallon. It has dropped to as low as No.10 when pump prices go under $2.50. . . .

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GetOffYourGas said:

The conclusion is flawed. There is no sharp line like that - below $3 and it doesn't affect vehicle choice, $3 or more and it does? Silly.

It's not only the price of gas, but how quickly we got there. 12 years ago, $3 gas would have pushed a lot of people into the still-new Prius. Today, $3 feels "cheap".

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Of course, that's totally logical! The analogy of the frog being heated slowly is similar to slowly rising gas prices.
Obviously, that applies below some threshold price, but it's now greater than $4 - $5 with no sharp breakpoint
as implied.

While fuel prices are one reason to buy an AFV vehicle, it isn't the only reason.
The electric cars also sell on things like quality of drive, performance, and (for about 40% of the car market) convenience.

These are the reasons the plugin market continues to grow rapidly.
Higher gas prices will only increase that rate even further.

It's also important to note that higher electricity prices tend to depress the plug-in market. While gasoline prices go up AND down, electricity prices tend to only go up. The exception to this rule is that many people can drop their per-kWh electricity price by installing photovoltaics on their roof (though the electricity is typically pre-paid).

RegGuheert said:

It's also important to note that higher electricity prices tend to depress the plug-in market. While gasoline prices go up AND down, electricity prices tend to only go up. The exception to this rule is that many people can drop their per-kWh electricity price by installing photovoltaics on their roof (though the electricity is typically pre-paid).

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My grid-sourced electricity has been up and then down for the past 5 years that I have been tracking (since I installed my solar panels).

Here are my average costs/kWh (includes an optional $0.015/kWh for "greenup", which most consumers do not choose - parenthesis are the "standard" rates):
2012 = $0.1211 ($0.1061)
2013 = $0.1267 ($0.1117)
2014 = $0.1375 ($0.1225)
2015 = $0.1219 ($0.1069)
2016 = $0.1130 ($0.0980)

Last year was actually the cheapest since I started watching them. The standard rate was below 10 cents / kWh.

All that said, I don't think the average consumer even knows what their electricity prices are. Before I had solar, I vaguely knew, but not to this precision. So how can an unknown factors affect PEV sales?

GetOffYourGas said:

My grid-sourced electricity has been up and then down for the past 5 years that I have been tracking (since I installed my solar panels).

Here are my average costs/kWh (includes an optional $0.015/kWh for "greenup", which most consumers do not choose - parenthesis are the "standard" rates):
2012 = $0.1211 ($0.1061)
2013 = $0.1267 ($0.1117)
2014 = $0.1375 ($0.1225)
2015 = $0.1219 ($0.1069)
2016 = $0.1130 ($0.0980)

Last year was actually the cheapest since I started watching them. The standard rate was below 10 cents / kWh.

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Weird. I suspect that is is the exception rather than the rule.

GetOffYourGas said:

All that said, I don't think the average consumer even knows what their electricity prices are. Before I had solar, I vaguely knew, but not to this precision. So how can an unknown factors affect PEV sales?

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No argument. However, when that same average consumer considers purchasing an electric vehicle, many will compare the fuel costs of the two options to see how they compare.

My electricity rate is down slightly.

Yup, mine has also been down the past two years. It was rising pretty steadily until about 2010. Then a fire broke out in our main power source (coal plant) and destroyed 2 turbines completely and another 2 were heavily damaged. Prices immediately went up from about $0.08/KWh to $0.17KWh with some extra emergency fee thing. The "base rate" and connectivity charge and access charge and all that were unchanged but the $/delivered-KWh went way up. After they repaired the 2 and then another year later replaced the other 2 we stopped buying our energy from other sources and the prices are down to about $0.11/KWh.

Crude oil continues the free fall.

https://finance.yahoo.com/news/oil-hits-us-5-why-pumps-will-stay-open-when-prices-turn-negative-172104653.html

$ 5 per barrel.

Negative price is possible, as shutdown will be costly.

WetEV said:

Crude oil continues the free fall.
$ 5 per barrel.

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https://oilprice.com/

lorenfb said:

WetEV said:

Crude oil continues the free fall.
$ 5 per barrel.

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https://oilprice.com/

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Looks more like $21-28 depending on type

Difficult to refine sulfur filled crud that no one wants may be $5 per barrel.

Hard to summarize over large segments of the population. I’m not inclined to believe that most folks buy vehicles out of such rational reasoning as we seem to think here.

Those are rationalizations generally speaking. The main reason Tesla has been so successful in my view is that they have changed how their cars are viewed. Emotional reasons dominant.

I don’t think gas prices make a hill of beans of difference for the vast majority. Lot of talk. Not so much action.

-b

I bought my 7.4L powered suburban back in 2014 when everyone thought that $3.50 a gallon gas was the new normal.
It got 6.6mpg, they practically paid me to take it.
Then I got my leaf a few years later when gas prices came down near $2 a gallon for the first time in about 6 or 7 years.

Oilpan4 said:

Difficult to refine sulfur filled crud that no one wants may be $5 per barrel.

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WTI was below $15 ($14.77) just a bit ago. Lowest price this century.

The heavy "sulfur filled crud" usually sells at about a $15 discount to WTI.

On the other hand, skies are blue, even in places that hasn't happened in decades.