Study: Electric Vehicles Don’t Have A Chance Unless Oil Prices Increase 1,000 Percent
Oil prices would have to skyrocket above $350 per barrel for electric vehicle makers to make a dent in the auto market, according to a study done by researchers at the University of Chicago.
The batteries for electric vehicles cost, on average, about $325 per kWh, which means the price of oil would need to pitch upward by nearly 1,000 percent before Tesla’s auto fleet and the Nissan Leaf would be cheaper than gas-powered vehicles, researchers at the University of Chicago’s Energy Policy Institute noted in February.
The number are not likely to change much over the next few years, as oil traded at an average of $49 per barrel during 2015 and is currently trading at a paltry $39.51 a barrel.
“While alternative sources of energy and energy storage technologies have vastly improved, lowering costs, they still have a long way to go before they are cost competitive with fossil fuels,” Chris Knittel, co-author of the study and director of the Center for Energy and Environmental Policy Research, said in a press statement announcing the study’s findings in February.
The problems will no doubt be compounded by the fact that consumers are buying fewer electric vehicles and hybrids.
Registrations in California for Land Rover, for instance, were up nearly 40 percent last year compared to 2014, and Jeep saw a 29.8 percent surge in the Golden State, according to IHS Automotive.
Meanwhile, deliveries for hybrids, electric vehicles, and clean energy cars in the U.S. dropped 13.2 percent in figures released by Kelley Blue Book looking at numbers in 2015 compared to 2014.
Knittel’s research also shows troubling signs for the solar power industry.
The cost of solar power, according to the study, tumbled from nearly $450/MWh in 2009 to $150/MWh in 2014. Unfortunately for the likes of solar power companies SolarCity and Sunrun, these levels are still not low enough to compete with natural gas prices. The technological developments helping to produce massive currents of natural gas-fired power, Knittel and his co-authors note, are essentially keeping solar power at a disadvantage on energy.
“It seems unlikely that our technological abilities to recover fossil fuels should stop improving any time soon, Thomas Covert, an assistant professor of microeconomics at the University of Chicago’s Booth School of Business, said in the statement. “With continually improving technology, the world will likely be awash in fossil fuels for decades and perhaps even centuries to come.”
Knittel, for his part, advanced the idea that perhaps the best way to even the odds is to make fossil fuels much more expensive through legislative or executive actions.
“To change this, governments should put a price on carbon emissions and start injecting more money towards the basic R&D that is critical to making these technologies more cost competitive,” he said in the statement.
Democrats and the Environmental Protection Agency (EPA) continue to work to push through regulations that do the things Knittel suggested in the study.
The Democratic Party, for instance, added a carbon tax to a plank on its party platform in July, addressing so-called man-made global warming, despite warnings from one of the party’s wealthiest benefactors.
“Democrats believe that carbon dioxide, methane, and other greenhouse gases should be priced to reflect their negative externalities, and to accelerate the transition to a clean economy and help meet out climate goals,” the Democratic Party platform now reads.
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