"With gasoline prices spiking again, is it true that if we switch to electric vehicles that it will cost less to fuel them up, or is that just a snow job?"
-John from Niles, Michigan-
I filled up in Illinois this past weekend for $4.199 at a Speedway near Frankfort, IL. If we are going to compare that with the price of electricity, we need to take out the pieces of the price that will be there regardless of the fuel source:
Federal excise tax $ 0.1800 per gallon
State of Illinois motor fuel tax 0.1900 per gallon
State of Illinois motor fuel use tax 0.4000 per gallon
Environmental impact fee 0.0080 per gallon
Underground storage tank fee 0.0030 per gallon
Will County fuel tax 0.0105 per gallon (0.25%)
Illinois State sales tax 0.3817 per gallon (10%)
___________________
TOTAL TAXES 1.1732 per gallon
The federal excise tax supports the Highway Trust Fund and has not increased in almost 20 years. Likewise the Illinois motor fuel tax has remained constant since 1990. Since neither is indexed to inflation, that means less buying power for road construction and travel related infrastructure. The sales taxes are not dedicated to any road-related or travel-related expense. All of these taxes will be imposed on electricity if it takes over as a primary transportation fuel (although it does not now).
So with that, we have gasoline at $3.0258 per gallon, or about $0.025 per kBtu. We have two ways to look at the price of electricity:
1. Use the typical flat-rate pricing from ComEd (or an alternative supplier).
2. Use the real-time price based upon the market rate.
Although it would be really nice to assume that electricity as a fuel would follow a flat-rate price, reality suggests that fuel prices will follow at best a day-ahead real-time rate similar to the way that dealers currently price gasoline. I filled up at 5:00 p.m. on Sunday. According to ComEd, the cost of electricity was:
Electricity supply charge $ 0.0850 per kWh
Electricity delivery charge 0.0328 per kWh
TOTAL ELECTRICITY CHARGES $ 0.1178 per kWh, or about $0.0345 per kBtu.
That looks like electricity is almost 50% more expensive than gasoline! But we have one last factor to consider, and that is efficiency. If gasoline engine driven vehicles had the same efficiency as electric motor driven vehicles, the cost comparison would be valid. However, the standard gasoline engine is only about 25% efficient (meaning that for each four units of energy that go into the car, only 1 of them actually moves the vehicle forward). By comparison, electric vehicles convert at a rate of about 60% efficiency. Given this, gasoline works out to $0.100/kBtu and electricity works out to $0.0575/kBtu for electricity.
One last caveat: this analysis depends on the current price of the fuels. Unless major changes come in electricity usage in the country, transitioning to electricity as a transportation fuel will significantly increase the amount of electricity used in the country, increasing demand and causing prices to rise. The coincident reduction in demand for gasoline will lower that price. The final solution must become part of an overall energy policy that this country refuses to pursue.
Awesome!
ReplyDeleteThis is extremely interesting, thanks for the analysis Joe! With all that being said, do you have an opinion as to the best direction for the energy future of the country?
ReplyDeleteWhere do you see natural gas fitting into this picture...both as a source for electrical power and as a fuel source for consumer vehicles. it seems to me (living in Detroit) that there has been a recent push for vehicles that run on natural gas because of it's new found abundance in the US market. The technology is already in place and most automotive manufactures are producing (or have the ability) to produce motors that can handle the fuel (as can be seen in buses and other government vehicles). Combine this with the recent spike in supply with the advent of fracking and it seems we have another contender in the race. cheap, cleaner burning and locally sourced.
ReplyDeleteNatural gas has a large variance in the pros and cons. The pros are that it burns much lower volume of pollutants, but as you note, the major change in price structure comes from the expansion of fracking. The benefit to human life from the lower pollutants during burning is counteracted by the issues associated with groundwater pollution, increased seismic activity, and land destruction from fracking. In addition, the process of making natural gas "vehicle ready" have questions that must be answered to make it economically viable.
ReplyDeleteThe first solution is to significantly decrease the fuel requirements in the vehicles, then re-evaluate all of the systems we have assumed are required to make them provide the service they provide. We can produce cars that get 100 to 150 mpg....which is the first step to changing the way we approach transportation.