02-09-2009, 01:46 PM
I just thought of a question maybe some of you can answer. I'm certainly not an economist, but isn't there some "rule" of supply and demand? Does that mean that as more and more EVs hit the road that the cost of gas will go down and the cost of electricity go up?
What are your thoughts?
02-09-2009, 01:55 PM
On the electricity side of your question, what I learned hanging out on this forum is there is, at least for now, a fairly large reserve of electrical power generation that's unused because there's insufficient off-peak demand and it cannot be simply produced and stored. EV's, because they store electricity in their batteries, can tap this capacity by recharging off-peak. So for at least a while, we could say the supply is already there to meet the demand, hence price should remain stable.
With respect to gas, I have no idea. None of the gas price BS that has darn near ruined our economy seems to have much relationship to supply and demand, or maybe it does in some convoluted way. I give up trying to figure that part out.
02-09-2009, 03:41 PM
You can bet that as demand for petroleum goes down the oil producing countries will produce less to keep the prices tight and costly.
02-09-2009, 06:19 PM
the thing to remember about supply and demand is that , they are not instant forces...
As long as people demand Gasoline powered vehicles to travel... Gasoline demand has a minimum level it can drop to.
There are multiple supply and demand situations that overlap and influence each other... and there are time lags between them... it gets complicated fast... but it is all driven by supply and demand.
Larger utility plants are just much much more efficient ... and EVs are much much more efficient ... even if all the Gasoline cars got powered by gasoline power plants... it would still cost and pollute less than using gasoline cars like we do today does.
And there are plenty of other sources of energy that are far less polluting that the Grid could be converted one power plant at a time to... as the Grid cleans up so do all the EVs on the road... but all the gasoline cars stay just as dirty.
02-09-2009, 09:22 PM
It will be a LONG time before EVs make any sizable dent in in oil demand. There won't be any EV semi trucks for a while. There won't be any EV jets and airplanes. There won't be any replacement for oil in it's uses in plastics and rubbers. Most of the people who are driving SUVs and pickup trucks are not the kind of people who will go out and buy an EV any time soon. Compounding all of these facts with the fact that China and India are just now discovering their own new found addiction to oil and that OPEC is only going to produce as much oil as they think is ridiculously profitable for them.
I'm very doubtful there will be much change in the price of oil.
On the bright side, once you get an EV, you can pretty much never look at the gas price reader boards ever again.
02-09-2009, 11:45 PM
In a perfect world with small changes and cool heads, the price of gas will be a small percentage over what it costs to prepare the resource and bring it right to your service station.
That cost is increasing everyday and will continue because we have to move further out, drill deeper and use unconventional resources such as heavy crude and tar sands. The simple idea is EROEI (Energy Returned on Energy Invested). When it takes more of the same energy to bring it to your service station it will no longer be economically viable to use as an energy source. However, it may achieve greater value for it's other uses like pharmaceuticals, raw material for plastics and such, etc. This value will allow us to expand more energy to bring it to the point of use. We can also use cheaper forms of energy to bring this beautiful black gold to your service station. We can also decide to burn our cheap and abundant coal, which can't be used in our transportation fleet, to prepare and deliver a fuel that is capable of being used in our fleet . Point being that the liquid fuel has value beyond itís energy content.
Since there is so much petroleum left in the earth these basic concepts will go on well past all of our deaths. Things that may change this are:
1) Governments decide against the use of petroleum for one reason or another, CO2 is one reason.
2) More desirable substitutes are discovered or invented that make our use of petroleum obsolete or reduced (reduced demand).
One recent change that is causing all of our recent problems is that it appears that we have reached a point in time where petroleum resources may be unable to keep up with historical production rate increases. This is extremely important because our global economic model is based on ever increasing amounts of energy. Petroleum is used for 98 percent of the world's transportation needs so any changes in production will have a direct effect on the global economy.
So, there you go. Humans will continue to use petroleum as long as 1) It has value to them and they are willing to pay the price for it or 2) Our governments allow us to.
Since the production of oil seems to be in question at the moment, nobody has the formula to predict the price. As soon as demand get close to that 86 mbd production limit we currently have markets will get more unstable and prices will swing even more unpredictably. These production limits may either be actual resource production limits or limits due to improper investment in the past (it takes about 10 years from the start of a project to where it is producing in any significant way). Either way, the current production limits, as we have seen this past summer, cannot be change quickly, no matter how much we want them to. That is why the price of a barrel of oil can go so high yet more oil cannot be had.
Simple supply and demand analysis, although perfectly correct, is not very useful in this case because of the delays of all of the needed activities to change things. Supply can only be reduced easily, not increased. Demand can swing wildly but cannot be reduced without sever economic repercussions (as we have see these past months). Again, this is due to our economic models being based on continuous growth. These models are unsustainable and unfortunately for us we look to be the generation that actually feels the limits and the associated pain. The last generation felt only a taste of things to come (oil embargos) but we all knew those were just political limits. This is far more scary because we have no good solution at the moment. Even if we did, the time needed to implement them is too great to prevent economic crisis.
The world has no good solution and no good plan to develop one. I wonder when we will start working on the problem with the priority and dedication it requires. Iím guessing after another huge oil price rise. We might not be able to blame something else (mortgage bubble) this time. Of course, us humans are great at that so who knows. It may take a decade or longer to come to the conclusion that we need drastic measures to fix our petroleum problem.
We need to think of our petroleum problem as though hostile forces were amassing in our harbors and are about to make a beach landing. Unfortunately, we don't have a nuclear bomb solution. We are going to have to deal with this using down and dirty hand-to-hand combat.