Bloomberg Audio Studios, Podcasts, radio News. I was reporting in San Francisco yesterday and went passed the service station where the cheapest getass was six dollars and a sixty one cents a gallon, which translates into about one hundred dollars to fill your average car.
California has some of the most expensive gas in the country, but since the US and Israel attacked Iran in late February, the average cost of a gallon of gas in the US has steadily climbed. It's now nearly four dollars a gallon, up from a five year low. As oil and gas supplies are disrupted and conflict continues in the Middle East, Bloomberg reporters Todd Woody and oxshot Roti are tracking how consumers around the world are starting to feel the effects.
European gas prices have gone up thirty, sixty, even one hundred percent, depending on where it's being consumed in Europe. The worst hit, I will say, are Asian economies, places like Pakistan, which depend a lot on LNG coming from Qatar, Bangladesh, Japan, South Korea, even China.
To some extent, President Donald Trump has been sending mixed signals about whether the war with Iran is going to drag on or nearing its end.
We have a very serious yesse of making a deal that doesn't guarantee anything.
I'm not guaranteeing anything.
On Monday morning, Trump posted that the US has been having quote very good and productive conversations with Iran about a resolution to the war, and that he had instructed the Department of Defense to postpone strikes on Iranian power plants and energy infrastructure for the next five days. The price of oil dropped on that news. Then Iranian media reported that there are no talks between Tehran and Washington.
Oil prices climbed a bit. The turbulence in the oil and gas market and uncertainty over how high prices may climb has gotten some people thinking about energy alternatives.
I think one thing that's hard to really know quantify is what is the psychological effect of these wars, And this is the general instability and chaos over the last couple of years, regardless of whether they see really high gas prices at the moment, they think and really should get ready for the future. And my relation beats so dependent on energy systems that could really drive up my bills.
I'm Sarah Holder, and this is the big take from Bloomberg News today on the show, how shocks to the oil and gas market are driving interest in electric vehicles and solar panels, and what prolonged conflict in the Middle East could mean for the future of renewable energy. Akshat Todd, you've both written about how people are responding to these high higher oil and gas prices and these chalking headlines
about the potential for them to get even higher. Some of these people are taking it as a sign to think about weaning off gas and go out and get an electric vehicle. Todd, what has your reporting found about the spike and interest in evs and where is it showing up.
There's definitely been a big spike in searches for evs and hybrid cars since February twenty eighth. We don't have sales data yet, no, if that's translating that and doylically, people are more people showing up the dealerships to check out the cars. But economists I've spoken to say that people tend to really pay attention to the gas prices around the time they're thinking about buying a car, So
that could change. If these prices become sustained over a period of months, then you might get people thinking, oh, maybe I should switch to an EV versus having that as an option of the time they need to replace their car.
The story, I think is more attractive for a drivers because regardless of the price of oil, uptake of EV's has been higher in many Asian countries than even European or American markets, and I think that is likely to accelerate.
We've had reporting from our colleagues in Asia showing that yes, again, number of people showing up to showrooms has gone up, but actually some of the early sales figures that we're getting from anecdotes are showing that numbers of cars electric cars being sold has doubled or even tripled in some markets.
One of the things that could shape our understanding of how this oil price hike might affect the EV market is looking back to history. Right after Russia invaded Ukraine, for example, oil prices spiked, were more people looking to buy evs in the US?
And did they? There was about a sixty six percent spike in sales in twenty twenty two. I think it was probably a bigger shock. Also because gas prices had been low before that time, and so when they really shot up in twenty twenty two, people really switched to EV's and at the time there was seventy five hundred
dollars federal tax credit for the cars. I think one factor that's different this time around is that there's increasing supply of used evs, which are quite cheap because evs have a huge creation loss after they're sold, so it's quite possible to buy a used DV for like thirty thousand dollars that's two or three years old. I think that's probably going to drive sales as well.
This new consumer interest in evs is coming at a rough moment for the EV industry. The Trump administration let the EV tax credit expire. We've seen some auto companies walk back their plans for EV investment as sales were lagging. How big of an opportunity then, does this moment represent for these businesses.
I'm a makers have long time spans, so they're not going to change their plans because of a spike and oil prices. Gasoline prices right now, I meant that it was sustained for a much longer period of time, but they've just taken huge charges against their EV businesses to discontinue some models and reconfigure factories. So I don't believe
they're going to turn on a dime. They say there's sufficient supply BB's right now, so it doesn't seem to be an issue, and I don't think you're going to see them US manufacturers at least change their plans immediately.
What about in markets like in Asia Akshat, where there's a different story playing out. How might this change longer term plans for those companies.
So we are already seeing one of our colleagues went to a car dealership saying that our waiting list is growing and our biggest challenge now is ensuring that we get enough supply. Now that anecdote also is reflected in stock prices. We've seen Asian electric car or stock prices really rise over the last month. So there is clearly a growth story for Asian electric car makers that I suspect the European automakers, if not the American ones, will be looking at and they might factor that into their
longer term decisions. Because we are seeing the Asian automakers start to take on parts of the market that used to belong to the Japanese, to the European, the American auto companies.
Well, I also want to talk about some of the other ways consumers might be shifting their habits or thinking about shifting their habits to adapt to rising energy costs. Are you seeing people look into alternative ways to heat, cool, and power their homes.
To some extent, So we have reporting here in the UK and in Germany again to places that have in recent years seen power prices spike because of gas prices spiking, and there has been more awareness among the people that there are alternatives available in heat pumps, in rooftop solar, and so we've seen something like a thirty percent increase in interest among buyers for these products. But there is
still a challenge that there are not enough installers. People are still not aware of the quirks of moving from a boiler to a heat pump. They don't know whether they'll be able to get repairs done as easily as when the boiler breaks down because there are more boiler engineers available to fix things. So there is still a public education that needs to happen. But power prices do factor in do their decisions, and again, like in the
EV story. If you're about to replace your gas boiler because it's old, now this would be the moment to speed up that decision.
Todd, how might people's calculus around buying an EV or installing a solar panel changed? The longer this conflict goes on.
They will be knock on effects. So right now, no one's going to go spend fifty thousand dollars on a solar array on their house, even if they're sort of nervous about the future. However, if people start to buy more evs, what tends to happen is they charge at home, discover electricity bills getting up thirty percent. That's when they get solar. So the solar installers that I talk to expect that to happen. Is it happens in the past
when people buy cars. Then once they put on the solar panels, then they go, oh, I actually get a heat pump because then basically powering everything from the sun. So if prices stay high for a month's on end and there's definitely a spike in EV sales, you're probably seeing down their line a spotic in solar installations and heat pumps and other electrical devices as they replace natural gas appliances.
Coming up as the price of oil surges, the math on renewable energy is changing for governments around the world. We've talked about how consumers and companies are responding to the high price of gas right now and these energy price spikes, but akshot, how do you see governments thinking about this moment as it relates to energy policy at
a high level. Are we at the point yet where leaders are looking to shore up alternative energy infrastructure or are they more focused on finding other ways to bring gas prices down.
It really does depend on country to country. If you're a country that is immensely dependent on importing almost all of your fossil fuels, then yes, you are looking for alternatives. In other countries, like in India and China, for example, where there is an alternative available to gas in coal, you will see increase in coalburn. We saw that during the last gas price crisis after Russia attack Ukraine that coalburn went up in India, it went up in China.
But it's only available to the countries that have coal in their mix, and so we are going to start to see governments make those choices. Now, do they make policies that last long and do they make policy that would sustain the momentum for these clean energy products. That remains to be seen.
Did we see this dynamic after Russia invaded Ukraine in twenty twenty two, and how long did the interest and alternative energies last at the consumer level?
At a country level, we can see the data and it's actually quite clear because what happened in Europe specifically is that there was a concerted understanding among governments that they want to get rid of their dependence on Russian fossil fuels, and they had really three options in front of them. Try and get fossil fuel from other places like the US, which would come in the form of liquified natural gas, which is more expensive, and so they did,
and they paid a lot of money for that. Cut the use of gas, which also they did some of the industry shut down, but really households also reduced their gas use. But it's really this is the first type of energy crisis where there's this third option of going to clean energy, and Europe really did to pull off an accelerated deployment of renewables in that time. So bluemackenniaf data that we've looked at showed something like a forty percent spike in solar panel deployment the year after the
Ukraine crisis in twenty twenty three. And it's not a story that just remained in Europe. We also saw this happen in developing countries. So Pakistan has had some of the most spectacular growth in solar and then a year later in batteries purely driven by a gas price spike.
What does history tell us about how long or how quickly these energy adaptations can happen and how long they can help countries be resilient.
So one of the things that analysts always complain about is that countries tend to forget the lessons of a crisis. So solar installations in Europe have largely plataued from the
time when they spiked after Russia attacked Ukraine. We also know, for example, in Pakistan, despite this amazing rollout of solar and batteries, it's actually causing all sorts of problems on the grid because suddenly people are producing so much of their own power that they're consuming less from the utility, and the utility has all these fixed assets in the grid in power plants that it is built that it needs to find ways to pay for and it currently doesn't.
So now the utility is looking to lobby the government to slow down this rollout of solar that is happening in the country, which is essentially a chaotic transition rather than a much more planned one.
So there are all these reasons governments could be moving towards clean energy right now. The US, though, appears to be doubling down on oil. The Trump administration temporarily lifted sanctions on Russian oil already in transit, it's releasing more petroleum from the strategic Reserve. What could the longer term effects of these kinds of moves be? Does it further solidify the US's reliance on fossil fuels even in the midst of these energy price shocks.
So these are short term measures to try and tame the price of oil. When the strait of horm moves has been closed for three weeks, something like eight million barrels a day of oil supply is not available. That is about eight percent of global oil supply. We know prices are rising as a result, So what can you do in the short term While you can try and inject some of that available oil outside of the Strait of horm moves into the system. So taking off sanctions
from Russian oil allows for that. The strategic Petroleum Reserve, which exists now in many countries because the International Energy Agency was created after an oil crisis specifically with the goal of having this reserve to avoid dealing with these kinds of crises, is being tapped, but it is also still very limited. It might provide maybe two hundred days worth of oil supply if everything is to happen. That's
covering you for a few months. There's also some conversation now to try and remove sanctions on Iranian oil that again will help you tame some of it for some time. Those are all short term fixes that will run out eventually.
I just want to pause and reflect for a second that we've been talking almost exclusively about the economic motivations driving the adoption of renewable energy, not the environmental benefits, and that strikes me as a big shift from the conversation even a few years ago.
One hundred percent because in the initial parts of trying to build the energy transition and clean energy products solar and wind power and batteries and electric cars were just a lot more expensive than the alternative, and so governments had to find ways to subsidize it force either states
or their own grides to become cleaner. And those were just expensive ways of trying to get to a place where we are now, where these clean energy products are cheap and are affordable and are even the economic option for you. And so we are seeing an adoption at a level that is driven by economics first and climate second that we hadn't seen in the past.
This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg dot com, subscribe today at Bloomberg dot com slash podcast offer. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.
Thank you.