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The debate rages on as to whether gas prices in America are too low, and we could be looking at a very different picture if things don't change drastically here soon. For an example of what might be, check out New York Times columnist Thomas Friedman, who paints a picture of where the electric vehicle (EV) industry could be going if gas prices stay where they are. In his words, "you'll import your new electric car from China just like you're now importing your oil from Saudi Arabia."

The current average price of $2.60/gallon in the U.S. puts it at nearly half the cost of what China is currently paying ($5/gallon), making electric vehicles all the more attractive there. If that doesn't concern you, consider that Beijing recently announced it is investing $15 billion towards a domestic electric car industry that will start in 20 pilot cities. The money will go directly to the leading automotive and battery companies in China. Friedman thinks creating market incentives to buy electric cars in the U.S. and building a charging infrastructure – on a much larger scale than we're doing now – are the keys to ensuring that the EV industry doesn't move entirely over to China. One place to start: higher gas prices. It's not hard to imagine the increase in electric vehicle demand we'd see if gas prices in America were doubled. That would be one serious market incentive.

[Source: NYTimes | Image: Richard – C.C. License 2.0]


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  • 41 Comments
      • 4 Years Ago
      I am amazed at how many people think that raising the gas tax during a recession is a good idea. The real unemployment rate in this country is over 10%, now you want to add inflation to the mix?
        • 4 Years Ago
        Everything that moves by trucks will increase in price, including food. Last i checked everyone eats, or trys to anyway. The idea that unemployed folks aren't driving so it's okay to raise the cost of living makes no sense. Eliminating subsidies makes much more sense, less government spending, radical concept I know.
        • 4 Years Ago
        Hybrid Trucks and Electric Trucks are what this country needs Yesterday. If prices spike again, the same people here who are saying hybrids and EV's don't make sense, are going to be Blaming "Government" as the problem.

        You let the "Tea-Republican-Party" run this country and you're going to get:
        - SEC once again cut to shreds: Wall Street Fraud runs rampent
        - Wall Street Fraud runs rampant
        - Oil Price Speculators at it again
        - More Out sourcing of US Jobs.
        - US becomes a provence of China
        - US goes to war with Iran for their oil.
        - Oil Price Spikes again.

        You want to solve the corporate control of the USA?
        Elect 100 Liberal Democrats to the Senate.
        Not Corporate-Democrats: LIBERALs.
        Then and ONLY Then will you get US Jobs, Wind and Solar, and government programs to move off foreign oil.

        Or, you can listen to the Koch brother's puppets [ Limbaugh and Beck ] and watch them destroy this country.
        • 4 Years Ago
        No pain, no gain. By allowing gas to be so cheap, we are just digging a deeper hole for when oil prices go up. We need to start changing people's behavior NOW because cars last 10 to 17 years. When gas starts costing $7/gallon, you'll see the wisdom of having had higher taxes earlier.
        • 4 Years Ago
        Those unemployed folk aren't driving to work every day. We could be putting gas tax money towards renewable energy projects, which will benefit everyone in due time.

        "The meaning of life is to plant trees that we will not live to sit in the shade of."

        Let's look towards the future. We have to, at some point.
        • 4 Years Ago
        That's why i push for extra gas tax for consumers, and no extra tax for commercial.
        Commercial fleets are watching their gas consumption because they see the bill at the end of the month!! But average joe doesn't.

        Otherwise people will just continue to buy suburbans and drive them to work alone.
        • 4 Years Ago
        "Eliminating subsidies makes much more sense, less government spending"

        I'm all for it. Lets stop subsidizing oil production so that gas prices in the US are on par with the rest of the world.

        Or are those billion dollar subsidies not what you meant?

      • 4 Years Ago
      "It's not hard to imagine the increase in electric vehicle demand we'd see if gas prices in America were doubled."

      I don't have to imagine it because it will never happen -- it's political suicide.
        • 4 Years Ago
        Gas prices will double, but we will be paying the extra money to multinational oil companies and oil exporting countries.

        Oil is getting harder and more expensive to extract, requiring more energy inputs(deepwater, tar sands, oil shale), while china & india's daily consumption of oil continues to grow.

        More money will be leaving the US for good because people are back to buying SUVs because hey, oil is cheap and gas taxes will never increase from 18 cents set in 1993.

        But we could force people to make more rational decisions by implementing a system where we raise the tax on a gallon of gas by 10-20 cents every year. That would let people know that the cost of gas is going to increase(for certain!), In ten years gas will cost at least 1 dollar more. If gas prices spike and the market cant bear the additional tax then we could have a temporary tax holiday. But when buying a vehicle people would be forced to pay more attention to how much gas it consumes and how that could impact their household budget in the future.
      • 4 Years Ago
      Tom, what the hell is wrong with you? The price of oil just doubled between January 2007, when control of Congress changed, and August 2008. Where are the electric vehicles? Where are the green jobs? Where are the solar panels and the windmills? The only thing I see is 10% unemployment, an over-extended middle class, a credit crisis, and monumental Federal debt.

      Doubling the price of fuel just administered the death blow to our slumping credit-based economy. Granted, fuel tax revenues would likely stay within our economy instead of being shipped overseas to oil sheiks, but you'd still have to be ignorant to suggest doubling the price of fuel when 80% of Federal spending is Social Security, Medicare, Medicaid, Welfare, and Unemployment. If you double the price of fuel, every penny of tax revenue is going to have to be shipped back to the people who are on a fixed Federal income. The middle class are tapped out. They can't pay for it!

      I've got a much more efficient idea. Why don't we just let Exxon, Shell, and BP fix the price of gasoline? No government inefficiencies in that plan! Lot's of happy shareholders too! Didn't we just finish crucifying big oil in 2008 for price gouging and destroying the middle class? Now we need to double the price of oil? Which way is the wind blowing today?

      This is intellectual dishonesty at its worst. The Chinese gas price is immense b/c they don't buy on the open market. They try (and fail miserably) to develop the oil fields themselves. The artificially low price was causing shortages so they had to raise the price in order to get the domestic oil industry to increase supply. In other words, they had to raise the price of fuel b/c their domestic oil companies cannot deliver fuel efficiently to customers. Why would we mimic failure? B/c it fits someone's agenda?

      Why in hell would we fashion our economy after a mercantile empire? The Chinese hoard resources like its 1800. What's next? Friedman says the West should colonize Africa b/c mercantilism is back "in"?

      Friedman is good for one thing and one thing only--interpreting the present. As soon as you ask him for a course of action, he invariably bungles things up on a monumental scale. Obama, is actually using a much smarter idea--CAFE standards. If manufacturers continue to skirt the rules, we can simply make standards per vehicle. If Tom knew anything about the ICE he would know that it is only about 15% efficient under normal driving conditions. We can transition from ICE to hybrid to full electric without murdering the middle class and advancing plutocracy. We also need the flexibility to switch if something better comes along. A centrally planned economy doesn't have that luxury. They follow the 5 year initiatives to the bitter end.

      China's a big market, Tom. That's a lot of dough for you. Don't say anything that might marginalize your publisher.
        • 4 Years Ago
        'The Chinese gas price is immense b/c they don't buy on the open market.'

        ??Yeah they do. Petrol prices in China are high for the same reason they are in Europe, because of tax.
        • 4 Years Ago
        What a long winded rant with bogus statistics. Who cares what the oil prices were on August 2008? They are 1/2 that price now. And there are more windmills than ever, that industry is actually growing really fast whether you realize or not. More wind electricity was installed than coal in recent years.

        And 80% of the budget is not spent on those things. That only leaves 20% and you didn't even mention dept of defense and the wars.

        And if you raise gas taxes, people can avoid them by buying more efficient cars as they should have been doing (hey, jobs created!). And as you point out, those taxes stay in this country instead of being shipped over seas.

        And the Chinese do buy oil on the open market . . . where else do you think they get it from? Their oil supply peaked and they buy more on the open market every year . . . why do think gas prices are going up? Duh.
      • 4 Years Ago
      "One place to start: higher gas prices. It's not hard to imagine the increase in electric vehicle demand we'd see if gas prices in America were doubled."

      Moron.

      A gas tax THEE most toxic political idea you can conjure up. Its a non-starter. Politically DOA. If that's your starting point either you don't want more EVs in the first place, or you are a MORON.

      btw got $5 gas before and it tipped the economy off the edge.......and this guy wants $6 gas? Yeah. EV business would be GREAT. But the economy would be DEAD. Why not just invest the $30Billion in an EV infrastructure instead of putting a gun to people's heads and telling them what to buy. Or if you want to tax, tax automakers and consumers for every gas guzzler and use it for an EV infrastructure.
      • 4 Years Ago
      If we had a booming economy, as we did in the 1990's, then I might agree with Friedman that we could "afford" to raise gasoline taxes, as long as those taxes subsidized the price of an alternative fuel / propulsion vehicle of the consumer's choice (don't want government to select the winning tech). Unfortunately, energy prices are already hurting the economy, so taxing energy would only hurt us further.

      No doubt, China is jumping into alternative fuel / propulsion vehicles in the same way they jumped into photovoltaic tech. There again, the risk is that you build out manufacturing capability based on a tech that could be obsoleted in a couple years. Steady, organic growth of renewable techs prevents over investment in obsolete techs.

      Americans need to address every aspect of their consumptive behavior and develop an economy in which they produce / reclaim / renew all essential resources (water, energy, food, textiles, shelter, transportation, communication) domestically.
        • 4 Years Ago
        Well raising gas taxes would be good for the economy in the long run. Gas prices are going to go up no matter what. So we might as well raise them now with taxes to get people to start using gas more responsibly.

        By allowing gas prices to remain low, we are just setting our selves up for a huge disaster when gas prices do go up (due to higher oil prices) and our idiot consumers all have 15MPG SUVs with big car loans. I am predicting a 'gas guzzler bubble' . . . lots of gas guzzlers that were purchased and then lose their value when gas prices go up past $4/gallon again.

        If we raised gas taxes, we could prevent that. We could always drop the taxes later.
      • 4 Years Ago
      Did you notice the massive MISTAKE/LIE in his article? He implies that Obama & our government is doing nothing to support EVs. (He points out that both Europe & China have high gas prices.) And says the Coda costs $37,000.

      Well the Coda costs $44,900 . . . the only reason the net effective cost is $37,000 is because A $7500 TAX-CREDIT that acts as a price subsidy.

      I don't know if he is ignorant about this or if he is being intentionally deceptive . . . either way, it was pretty lame.

      He needs to be honest about EVs instead of producing hype. Over-hype will make EVs flop since high expectations will not be met.
        • 4 Years Ago
        The lie is that he is implying they are doing nothing to give price support. Here is the quote in better context:

        "Europe is using $7-a-gallon gasoline to stimulate the market for electric cars; China is using $5-a-gallon and naming electric cars as one of the industrial pillars for its five-year growth plan. And America? President Obama has directed stimulus money at electric cars, but he is unwilling to do the one thing that would create the sustained consumer pull required to grow an electric car industry here: raise taxes on gasoline. Price matters."

        Yes . . . PRICE MATTERS. And that is why they have a massive $7500 price support for electric cars. Raising gas taxes is not the 'one thing' that can be done. Tax credits address the very same issue (making EVs more price competitive) but with a different method. Raising gasoline taxes is political suicide in the USA, so the politicians needed to find a different way of achieving the same result. So that is what they did.

        I agree that raising taxes would be good policy. But I'm also a pragmatist . . . if that is politically impossible, then find another method of achieving a similar result. And that is what they did.
        • 4 Years Ago
        Where is the lie? "President Obama has directed stimulus money at electric cars, but he is unwilling to do the one thing that would create the sustained consumer pull required to grow an electric car industry here: raise taxes on gasoline."

        As for the price of the Coda, many automakers advertise the after-tax-incentive price. He probably just used that one for brevity.
        • 4 Years Ago
        Obama can't unilaterally raise gas taxes, as much as he would undoubtedly like to.
      • 4 Years Ago
      This is gonna sound cheesy, but Rage against the machine has this to say:

      It has to start somewhere, It has to start sometime
      What better place than here, what better time than now?

      I feel like we're living in a nation that is just too stupid to fend for itself anymore. Everyone knows that green technology is the future, but despite all our efforts ( just throw some money at it! ), we're still handing all of the critical resources and manufacturing to China! And they also get all of our R&D because we contract the manufacturing out to them too.

      It's extremely frustrating to watch. It makes me wanna rage.
        • 4 Years Ago
        I'm building an eBike. It will have 10 amp hours @ 37 volts; that's about 20 miles of range on a little 50lb bike :)
        • 4 Years Ago
        MiddleWay, what are you going to do with a 5 Amp Hour battery?

        @EV, 1976? Yup. Sounds about right. Oh, wait. You are talking about "Puff the Magic Dragon" right?
        • 4 Years Ago
        At the same time, Americans don't make anything that I would consider affordable; mostly due to extremely high markups. People here are trying to get rich on the stuff, apparently.. not provide it as a solution for the masses.

        For example, i went to go buy a 5 cell 5000mAh li-po pack yesterday and the place was asking $106 for it and weren't flexible on the price. I could buy the same thing direct from China for $35 + $7 shipping.

        And the American-manufactured equivalent was $320!!
        • 4 Years Ago
        Middle Way, everyone knows rock achieved perfection in 1976, it is a scientific fact.

        A123 and Kocam don't sell to the public. They are waiting to get rich off OEM's.
      • 4 Years Ago
      Friedman writes from a typical green fear perspective. But that does not mean the cost of gasoline in the States can stay where it is. It WILL go up. One scenario is OPEC will push it up to make one last giant killing on what is now an assured dying commodity.

      As the demand for gasoline in the States and Europe continues to decline OPEC will be pressured to raise prices to compensate for the volume sale losses. Higher gas prices will in turn push consumers to faster adoption of EVs. OPEC, like any corporation runs itself on near term revenue. When those quarters start showing declines they will push up prices to compensate. Or heads will (literally) roll.

      Good luck OPEC. Your days are numbered.
        • 4 Years Ago
        Oil is NOT a dying commodity. Quite the opposite . . its popularity is the problem. People want it so much that we will bid up the price high. And that is why we need EVs as an alternative.

        And even if we had cheap EVs (which we won't), oil will still be hugely popular for heavy transport, petrochemicals, aviation fuel, pesticides, plastics, medicine, etc.
      clipsinite
      • 4 Years Ago
      Another option is to have more progressive vehicle registration fees that reflect a vehicle's lifetime pollution and abuse of road infrastructure. Registration fees for light electric cars that do not cause potholes will be just $10 every 3 years. Registration fees for the heaviest and most gas guzzling car will be $2000 every 3 years. The median car will be $250.
      • 4 Years Ago
      "Who cares what the price of oil was in 2008"

      All of us should. We just saw the effects of doubling the price of oil. It wasn't a green economy with more jobs. The effects of doubling the price of gasoline was a liquidity crisis in the consumer credit industry that crippled our slipping economy.

      Friedman is banking on the idea that tax revenues will stay in the United States instead of being sent overseas. That's nice, but you're still going to wipe out the middle class (in the near term when supply is largely inelastic). Worse still, doubling the price of oil would ravage social security recipients who don't have the income or credit capabilities to transition to new vehicles.

      And another thing, if we double the price of oil, who's to say that the Japanese and the Europeans (who hail from countries with high domestic gasoline prices) won't massacre the American car companies we just bailed out? The Europeans and Japanese already have fully-developed crash-tested micros, subcompacts, and compacts.

      So let's recap:
      1. Doubling the price of gasoline just smashed our weak economy
      2. Doubling the price of gasoline will rape the elderly and the lower middle class
      3. Doubling the price of gasoline might give a huge advantage to foreign automakers

      Like I said, you can trust Friedman to interpret the present, but if you ask the guy for a plan of action, he will suggest suicide every time.

      CAFE standards or vehicle efficiency mandates or gas guzzler taxes are more efficient. The costs of redeveloping the vehicles is spread over a mass produced fleet. With gas taxes we have to pay for redesigned fleets, and we have to pay for higher gas prices. It's a double whammy. Friedman doesn't care b/c he's only trying to manipulate demand.

      You've got to wonder if Friedman is a closet sadist. Saving 50% on annual fuel bills isn't enough incentive to transition consumers to smaller, more-efficient cars. Friedman suggests a $2.50 Federal gasoline excise tax to bankrupt the middle class unless they transition. Everyone must spend a mint on new transportation equipment to maintain the same cost of living. Great idea! I hear Chairman Mao was pretty good at spreading misery as well. How apropos.
      • 4 Years Ago
      At least in the short term France may well lead. The effort there is proportionately greater than anywhere else, and it has nuclear power at reasonable rates to supply plenty of clean electricity.
      The technological base is also better than in China, as they have not got the same learning curve to climb as, say, BYD.
      There still are a lot of people in Europe who can lay out the money for an electric car, and strict emission controls to drive it on.
      Retaining the lead is another thing, but for four or five years at least Europe and especially France should be towards the forefront.

      I just checked out this site:
      http://www.automobilemag.com/car_lease/index.html
      and fed in the prices to lease different cars in the US, giving them a $499 deposit, just the same as the Leaf, I believe?
      It turned out that if you allow $100/mo for the battery, which is what we are to pay in Europe for the lease, then the top car that could be afforded is the Fit, at $289/mo, which is a clear class down on the Leaf, which is more comparable to the Civic

      So at $399/mo, and perhaps $15 for electricity, the Leaf seems to be very competitive even at US petrol prices, allowing 12,000 miles @ $3/gallon, for the Fit around 400 gallons and $1200, the same as for the battery hire.

      EV drivers are a class up on the car, and have low maintenance.
      It looks to me as though Nissan have more than made good on their promise to be price competitive with petrol cars.

      So all is not gloom for the US!
        • 4 Years Ago
        David Martin, please get those tight wads in Europe to buy a Tesla. They only sold 300 in all of Europe not counting Switzerland.
        • 4 Years Ago
        EV, as others have said, you would feel pretty silly on the autobahn being overtaken by a Golf!
        Handling in what we Europeans call 'bends' is not that great either. :-)
        The European rich are likely to go for some of the hybrids supercars various manufacturers are working on, with perhaps an EV for the town.
        The little Zoe may attact the cache for them to be seen live in, just as the Fiat 500 is currently for nipping around Knightsbridge, but the styling in the end is loling a bit bland.
      • 4 Years Ago
      The only advantage of ICEs over electric cars is range, even though the range of the Leaf meets the needs of most people most of the time. I remember the early days of TV when everybody wanted color but nobody knew how to do it. Now we not only have several ways to do it but the original way, the cathode ray tube, is obsolete.

      Similarly everybody wants an energy storage device for electric cars which will give a minimim range of 250 miles. Let us assume that today nobody knows how to do it at an acceptable price. It is only a matter of time, maybe this year or in five years, perhaps ten years at most when technologists will solve the problem.

      Unlike 2000, the oil companies now have no way to stop electric cars. No matter what they do in the west and Japan, they cannot stop China.

      As a practical matter buying an ICE car today is a bigger gamble than buying a Leaf. If the breakthrough in energy storage comes sooner rather than later, an ICE car wont find buyers as a used car. On the other hand we can expect that the Leaf can be adapted to better batteries. I believe that Friedman is right about this.
        • 4 Years Ago
        It is not just range, it is also refueling time. The two are related but not the same. Short range wouldn't be so bad if you could refuel in 5 minutes. And the night-long refuel time would not be so bad if you had a 300+ mile range.

        This is why I like the battery swap systems . . . they address the refuel time issue very well.
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