By Ernie Hernandez, November 11, 2012
One undeniable fact that is left undiscussed by the anti-electric vehicle (EV) crowd is the rate of change in the price of gasoline versus the rate of change in the price of electricity. We have discussed this previously, but it has been quite some time and the information was buried in the topic of another post. So let’s take a look at the price of both commodities, using the same source for our price database.
We used the Bureau of Labor Statistics (BLS) for our source, as they have both gasoline and electricity price data for several years. One thing that we noticed is that the BLS electricity price data is slightly higher than the Department of Energy price data that we used last year. While not a dramatic difference, we thought that it should be noted. Let’s start with the price of gasoline.
This chart represents the average price of all grades of gasoline throughout the country. Regional information is also available from the Bureau of Labor Statistics if you wish to track just your region.
One of the first things to notice about this chart of gasoline price over the past twelve years is the volatility in the price of gasoline. For instance, in late 2005 the price of gasoline went from just over $2.00 to just over $3.00 – a 50% increase – in about three months. It came back down, but then spiked dramatically again into mid-2006 and once again in 2007. These kinds of price fluctuations can have a dramatic influence on a budget, especially if one must commit a portion of their budget to commuting costs. These prices are plotted on a weekly basis which is what gives the price chart a jagged appearance. If we just go back ten years to January 2002 the price of gasoline was just above $1.00 per gallon. It reached a price peak of over $4.00 per gallon in mid-2008 based on all of the speculation in the oil markets, dropping dramatically over a three month time frame into the end of 2008. From that January 2009 trough, gasoline prices have more than doubled in just three years. Now let’s take a look at the cost of electricity.
This chart represents the average price of electricity throughout the country.
Looking at the price of electricity, a clear pattern develops. Electricity price rises every summer and falls every winter like clockwork. Also, there is a general upward slope to the price of electricity over the past twelve years, just as there was with gasoline. But if we focus on the past ten years, as we did with gasoline, we notice that the price of electricity has gone from just under nine cents per kilowatt hour to just under thirteen cents per kilowatt hour in January 2012. So while gasoline prices more than tripled in ten years, the price of electricity has gone up about 45%. Also, there have been no huge unexpected swings in price. One can budget for price rises in summer and price reductions in the winter with a gradual increase in price each year. Also worth noting – while gasoline prices doubled since January 2009, the price of electricity has pretty much remained constant (taking seasonal variations into account).
While no one can predict the future, we can look to the past for guidance about future possibilities. These charts alone offer a pretty compelling argument to consider switching to an EV. Especially when you consider that you can travel three to four times further for every dollar spent on fuel. Based on these charts, we expect that ratio to be even greater in future years.