Cause of Energy Volatility

Let's face it, Electric Vehicles are going to be the way of the future.  This transition and change has several positive perks but that's not to say it doesn't come with major challenges too.  

Let's start with the good:

The switch to electric vehicles will reduce our carbon footprint and hopefully reverse the harmful climate change challenges we are facing today.  In addition to the environmental benefits, not relying on foreign oil as we do now to fuel our vehicles is another positive benefit.  Even though the U.S. can drill and produce crude, the crude that we produce today is mostly exported because it's not the right type of crude for our vehicles.  You see, even if we changed our refineries to alter our domestic crude, we'd drive up the costs of our own fuel and that would be a blow to our economy.  We struggle with $6 per gallon gas as it is.  This is why a switch to Electric Vehicles is so desirable.  This isn't to say that going all electric doesn't present any challenges.  

Let's discuss the challenges:

The first challenge we'll discuss is the change in demand for electricity.   Since these cars won't run on fuel, we'll need to generate enough electricity to charge them.  Depending on where you live in the country, you may not even buy as much energy in a year to power your home as you'll need to power your car.  Let's say you live in Santa Monica in a 1,000 square foot home that needs little to no air conditioning.  You may use as much as 5,000 kilowatt hours per year to power your home.  By adding an EV, you could easily need to charge 6,000 kilowatt hours per year or more.  This means that you'll use more electricity to charge your car than to power your home.  Now, let's say you and your wife both drive for work.  You could now need twice as much energy for your cars than you were using to charge your home.  This is definitely an extreme example, but it helps to pain the picture of this challenge.  You could charge your vehicle at a charging station but now you're paying a premium and dealing with the inconvenience of charging elsewhere.  Either way, we're going to see a massive spike in demand for electricity and when the demand for a commodity spikes, it always impacts the supply chain and increases the value and cost of the commodity.  This means we'll see electricity prices higher than ever. This is why several experts believe electricity prices will double by 2030.  Also keep in mind that generating enough energy to power our vehicles is only the first challenge.  

The second challenge presented is in the delivery of this energy.  Currently in 2024, our energy bills are mostly charges to deliver the energy more so than to generate the energy.  It's like paying $5 for a pizza but $10 to have it delivered.   Our power grids are old and outdated, and they come with a high cost to deliver power.  To learn more about energy and solution you can visit our preferred renewable energy site. 

To learn more about this issue, read this blog.