The Middle-East war, the price of oil and how it impacts on EV owners | Analysis (and some opinion)
As an EV owner, you usually have to wait until the Thursday before a long weekend to enjoy feelings of overwhelming smugness and superiority as you drive past service stations where the price of petrol spins upwards like a poker machine.
Today, though, thanks to the Fearless Leader of the Free World, it looks like anyone who plugs in their car rather than making sad faces as they Shell out for dino juice is going to be so constantly smug they’ll actually start to resemble Donald Trump himself.
Of course, it’s worth pondering whether even EV owners should be worrying, just a little, about the soaring price of energy caused by what seems to be a slightly scattergun approach by the President of Peace and self-nominee for the Nobel Prize to making war on Iran.
It was a slightly savvier leader, Winston Churchill, who famously intoned that: ”Those that fail to learn from history are doomed to repeat it”.
I fear that Trump might think “History” is a Michael Jackson album and when it comes to remembering the past, his failure to remember being on Jeff Epstein’s jet suggests his memory isn’t great.
He was, at least, alive in 1973, when a number of Arab states in OPEC cut oil production and limited exports of the stuff in protest at US support for Israel in the Yom Kippur War. (Today, of course, the US doesn’t just support Israel’s wars, it fights in them.)
The price of oil nearly quadrupled as a result, owners of big, thirsty cars across America started running around with their hair on fire and the seismic impacts included, I kid you not, the introduction of a National Maximum Speed Limit (it was just 89km/h, too, and a desperate measure to reduce fuel usage).
Then, in 1979, the world went oil crisis crazy again, thanks to something called the Iranian Revolution – funny how these same countries keep turning up -and panic buying caused crude prices to soar from $US13 a barrel to $US34 (oh how we laugh at those prices now; crude hit $US82 a barrel last week with predictions it could surge past $US100).
All this, in turn caused something called “stagflation” across the industrialised world, which sounds like a really dud bucks’ party but is actually a combination of high inflation combined with stagnant economic growth and high unemployment, which is not good for anyone, including EV owners.
The good news is that theses crises led smart countries to build up Strategic Petroleum Reserves, so that they can’t be caught quite so short again.
The bad news? Australia might not be the smartest country. While the Netherlands’ strategic reserves can last 413 days, Korea’s 214 and even New Zealand’s 95 days, we’ve got enough for just 47 days.
Which makes smarter people wish we’d all adopted EVs a lot faster and more prolifically. The Australia Institute states that a shift to electric vehicles will help reduce our reliance on imported fuel, and that “the sooner this happens, the more secure Australia will be”.
The immediate future does not look good, President Trump has said the war in Iran could last four to five weeks—or “far longer”, which would be bad news for economies and humans who hate inflation – and interest rate rises – the world over.
This week, Iran threatened to “set fire to anyone who tries to pass through” the Strait of Hormuz, a vital shipping lane through which not only 20 per cent of the world’s global oil production passes each day, normally, but also a fifth of all Liquid Natural Gas shipments.
“This is going to have a wide effect on energy markets, not just in the Middle East or in Asia,” says Karen Young, senior research scholar at the Center on Global Energy Policy at Columbia University and Master of Understatement.
Jim Krane, energy research fellow and Middle East specialist at Rice University’s Baker Institute, is more direct: “Everything you buy and consume has an energy signature,” he explains. “When the price of energy goes up, it pushes up the price of everything else.
“More than 90 per cent of global transportation uses oil as fuel to move cargo or passengers or fly planes or ships, or you drive your car—that all requires oil.”
Yes, I can see you up the back, Mr EV Smug, raising your hand to say “not me”, and Krane sees you, too. He points out that rising prices at the fuel pump, particularly if they do crest the $US100 oil barrel mark, could spur “consumer change”.
“If you can’t get oil out of the Strait of Hormuz, you’d much rather be driving an electric vehicle,” he adds.
With all this in mind, it’s a little surprising to hear that the Australian Government is seriously considering axing the fringe benefits tax exemption on novated EV leases, due to the fact that the policy’s cost have blown out from $1.9 billion to $5.1 billion— nearly three times the original estimate.
It must be annoying when a policy you have introduced to encourage EV update and push down emissions works too well.
At the same time, the government is also reportedly considering an end to the zero tariff policy on imported EVs. All of this could be part of the Budget, due to be handed down in May, by which time the world could look very different, but at this point the Parliamentary Budget Office has estimated that axing the tax on breaks on EVs would save more than $23 billion over a decade.
Would I rather be running an EV for the next six months than a petrol car? Absolutely, who wouldn’t?
But what becomes more clear every week is that the state of our finances – both at a micro and macro, country-sized level – is very much out of our hands in the current climate.
Trump may not know much about history (example, he has suggested that “Hitler did some good things”), but he sure does make a lot of it.
