-February 26,2022-
The California New Car Dealers Assn says nearly a quarter of new purchases of vehicles in 2021 were in the hybrid /electric category as oil and gas prices in the state punish motorists. By comparison, the market share for alternative fuel vehicles was around 9% in 2017. Plug in hybrid share went from 1.9% of sales in 2020 to 3.3% last year as more carmakers offered the product. Now electric trucks are hitting the market.
In the past year, the average price for gasoline in California has climbed from $3.08 in January 2021 to $4.80 as of Feb 25, 2022, a jump of almost 40%.Ouch!
Californians are using less gas than they used to pump. In 2015 the state recorded just over 15 billion gallons sold in California or about 4.4 million gallons a day according the the Energy Information Agency.The latest figures available for 2021 – shows about 3.7 million gallons a day sold – up from pandemic numbers in mid-2020 when the number was as low as 2.7 million gallons a day for a period. Everyone stayed home.
Overall, California gas sales have plunged from a high of over 8 million gallons a day in 2006 to 3.7 million gallons a day, today. This is in great part due to much higher average mileage of the California fleet including a ramp-up of non-petroleum cars.
The pandemic hurt oil demand, idling many rigs that might produce new product during the pandemic.Today the Baker Hughes Rig Count shows 645 rigs active in the US, up 248 from a year ago but down from a rig count of over 2000 in 2014 and much higher earlier -as high as 4500 in the 1980s.
Reports say the oil exploration industry is reluctant to again “drill baby drill” to produce more barrels having been burned by collapsing demand during the pandemic. But now with a huge price increase -drillers ought to be motivated.
With the war in the Ukraine, experts say prices at gas pumps could go up across the country by as much as 20 to 30 cents a gallon pushing the average in California well above $5.
More domestic oil?
California Kern crude is now selling for $95 a barrel – up from $53 a barrel in January 2021, one would think a good incentive.
Year-over-year oil exploration in the U.S. is up 70.5 percent. Gas exploration is up 36.3 percent. The weekly average of crude oil spot price is 54.7 percent higher than last year and natural gas spot prices are 41.6% percent higher than last year.
To help California Gov Newsom’s budget calls for a tax holiday on a proposed tax hike of 3 cents that would be a little relief. A bill in Congress called the Gas Prices Relief Act of 2022 would cut the 18.4 cents per gallon gas tax levied by the federal government through the end of 2022.
In 2019, the U.S. imported 9% of the petroleum it used, the lowest since 1957. The largest sources of U.S. imported oil were: Canada (49%), Mexico (7%), Saudi Arabia (6%), Russia (6%), and Colombia (4%).
According to the American Petroleum Institute, the oil and natural gas industry supports nine million U.S. jobs and makes up seven percent of the nation’s gross domestic product.] As of 2021, the petroleum and natural gas industries support 10.3 million jobs and make up 8% of the U.S. GDP.
Kern County officials are lobbying regulators to loosen red tape on the county’s oil producers. A Kern Economic Development leader recently wrote “Despite the fact that Kern County has the most stringent O&G permitting regulations in the world, many state policymakers continue to pursue and advocate for energy policies that favor and (indirectly) incentivize foreign production over local production. Since 2020, the time it takes to receive an approval for well stimulation has skyrocketed from an average of less than 200 days to now more than 600 days, according to the California Geologic Energy Management Division.
Due to global warming concerns, many leaders want to wean California from using any petroleum.But slamming on the brakes all at once may not work either, as a political reality.
The EDC writer notes” the fact that Kern County has been declared the energy capital of California. The region is one of the top oil-producing counties in the U.S. and generates more than 50 percent of the state’s renewable energy. The nation’s largest wind and geothermal facilities as well as the second-largest solar field call Kern County home.”
More low income EV sales?
As for encouraging more EV car sales, one green car advocate says” California is lowering the MSRP and income caps for its Clean Vehicle Rebate Project (CVRP), which provides rebates of up to $2,000 for EVs and $1,500 for plug-in hybrids.
Starting February 24, new rules will lower the income cap for single filers from $150,000 to $135,000, according to the program’s website. The cap for head-of-household filers will drop from $204,000 to $175,000. The joint-filer cap will decrease from $300,000 to $200,000.
This means fewer high-income car buyers will qualify for the rebate, potentially leaving more funds available for buyers that are more likely to need the rebate to be able to affo