Drivers wonder if they should go electric as war spikes gas prices

WASHINGTON, March 12, (AP): When Kevin Ketels bought an electric 2026 Chevrolet Blazer last year, he wasn't thinking about the cost of gas. He just thought EVs were better and "wanted to be part of the future.” Now that the Iran war is spiking prices at the pump, the Detroit man is happy he is no longer filling up his 11-year-old gas-powered SUV.

"Electricity can go up, but it won’t go up nearly as much as gas will and it won’t go up nearly as fast, either,” said Ketels, 55, an assistant professor of global supply chain management at Wayne State University. Experts say prolonged high gas prices may drive some EV interest and sales, especially if drivers assume their electricity prices won't be affected by the crises.

But many factors influence consumer EV purchases - and electricity rates. Drivers of gas-powered vehicles are much more vulnerable to fluctuating prices that result from global conflict than those who charge their cars. The national average for a gallon of regular gas this week was $3.57, up from $2.94 a month ago, according to AAA.

Meanwhile, "residential electricity prices are regulated and are much less volatile than gasoline prices,” said University of California, Davis economics professor Erich Muehlegger. "As a result, EV owners are largely unaffected by oil price shocks.” But experts say electricity prices have been increasing nationally for a variety of reasons, including surging power demand from new data centers.

"This is an inflationary event,” Holt Edwards, principal in Bracewell’s Policy Resolution Group, said of the war. "Is this the driver in electricity prices? I think probably not. But it’s certainly a contributing factor.” To what extent oil and gas conflicts could translate to the electricity sector is yet to be seen. When it comes to the electricity an EV owner is tapping, much of the cost depends on which sources of electricity are in a local grid's power mix, experts say.

Because regulators set residential electricity prices annually, most households are sheltered from month-to-month changes in natural gas costs. Though experts say higher natural gas prices can increase the cost of generating electricity, natural gas prices haven’t risen as quickly or as much as oil prices have recently. Those are just two of many energy sources - including coal, nuclear and renewables - that power the electric grid.

"The energy component varies depending on the energy you’re using and the price of the energy that you’re using to generate electricity,” said Pierpaolo Cazzola, an energy expert at Columbia University’s Center on Global Energy Policy. "What happens is that in the U.S., the variation of the price of the energy component is smaller than it is elsewhere.”