DaChesserCat's Journal: Competition needed

When you go to fill up your car, you have a choice of where to fill the tank. All too often, all of the gas stations in an area have the same price. Or if one is slightly cheaper than another, there's some other factor that "evens" them out.

Where is the competition? Are these stations fixing the price of gasoline? That's hard to prove. They probably don't have any kind of agreement, formal or otherwise. It's entirely possible that the price they're selling for is the balance point between the best price they can offer (based on what their supplier charges) vs what the market will bear (people tend to drive less when they're broke, or when gasoline is significantly more expensive). The latter case is basic supply and demand, nothing sinister or conspiratorial about it.

If we want to get around for less money, more competition is needed. And that means some other form of energy. Diesel isn't an answer; it uses the same supply chain as gasoline. Ethanol isn't really an answer, either; the companies that supply the gasoline also supply high-ethanol fuels (E85, for example) because there are tax credits to be had for the company that "blends" the gasoline and the ethanol. So ethanol has been effectively co-opted by the same suppliers.

There is where Plug-in Hybrid Electric Vehicles (PHEVs) come into play. Like the Chevy Volt.

If I can charge up my vehicle and drive, say, 45 miles without burning any gasoline, especially if my daily commute is 45 miles or less, electricity has just become a competitor to gasoline.

In my area, electricity is 8.5 cents / kWh. And many of the electric vehicles (Nissan Leaf, Mitsubishi iMIEV, Chevy Volt) get at least 3 miles / kWh. Which means 2.8 cents / mile or less.

At $3.20 / gallon of gasoline, I'd need 113 mpg to drive around as cheap on gasoline. I'd need about 138 mpg on diesel ($3.80 / gallon) to match that. I'm lucky if I can find a vehicle which gets half that.

Electricity has another little advantage. If the increase in electricity consumption causes the price of electricity to go up, many of us have the option of acquiring solar panels or small-scale wind or hydroelectric equipment and making some of our own. No, I'm not joking; I live in rural territory. I've lived in rural places where I had a creek running through the property. A small water turbine, running off a creek, can produce a small-but-steady amount of electricity and make a small dent in your electric bill with the right equipment.

You can't make your own gasoline. And while some people have found a way to make their own diesel (biodiesel), it only takes a few people doing that before the supply gets eaten and you end up back where you started. There simply isn't enough waste vegetable oil around to provide fuel for a significant number of people.

In theory, you could make your own ethanol, buy gasoline, blend it to make your own E85 and run a flex-fuel vehicle on that. The only reason ethanol has its current price, though, is through economies of scale and because it is subsidized. As a small-scale producer, you don't have the same economy of scale and there are a LOT of legal headaches to making your own ethanol.

I have nothing but respect for Elon Musk and Tesla Motors. The fact that they're building Supercharger stations, where you can use high voltage and current to add significant mileage in a hurry, means that they understand that there needs to be infrastructure before people can buy their battery-only vehicles. For most people, buying a pure electric vehicle means that they have to have an additional vehicle, for those times when you want to travel beyond the range of your battery pack. Sure, if the battery is enough to do your daily commute, you can charge up at home. But without something like a network of Supercharger stations, you probably can't go "over the river and through the woods to grandmother's house." There just isn't enough of the right kind of infrastructure.

We need more PHEVs. The ability to run on gasoline when you need longer range, or when you forget to plug in and just need to get home, cannot be understated. Sure, you'll still need some gasoline or diesel fuel, occasionally. Until such time as we can ALL make use of Supercharger stations, we need a period of backward compatibility with the existing, fueling infrastructure.

And may the better economic choice win.

What if people don't want them?

[schwit1]

Cadillac is sitting on a 2 year supply of EVs [zerohedge.com]