The ongoing Ukraine and Russia conflict has hurt the gas industry big time, sending prices for gas and its related products soaring. This is because Russia is one of the largest producers of crude oil in the world and the conflict brings major crude oil supply fears. Since crude oil is used to create the gas we use in cars, the underlying cost of oil accounts for more than 50% of the cost of gasoline. Currently, consumers are suffering at the pump with gas prices hitting prices around $4.00 or higher. To help at least partially alleviate the inflationary issue, the Biden administration has decided to tap into the Strategic Petroleum Reserve. Some have been calling on the administration to pause the federal gas.
You may think those driving electric are protected from these costs, but they too are suffering financially due to this conflict. There are two main drivers of this price increase one affecting the purchase price and the other affecting the operating price of electric vehicles. To begin EVs have and will continue to increase in price because Russia is a key supplier of nickel which just a few weeks ago was up 67.2% or around $1,000. With this major hike in input costs for EVs basic economics tells us there will be a price increase across the board. Because electricity has also been rising in price due to inflationary pressures from a myriad of factors including the conflict, charging EV’s and thus operating them has also become more expensive. So how do the two compare head to head? Would it be comparatively cheaper to drive a gas car or EV? Well, according to the numbers it’s still quite a bit more expensive to fill your gas tank than it is to charge your EV’s battery. The work comes from Jeffries analyst David Kelley who (using February data) calculated that the total lifetime cost of ownership of an EV is about $4,700 less than that of a regular car. Moreover, as more EVs come to market prices will fall further. What do you think about the comparison?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.