If Not For China's Smart Energy Policy, Gas Would Be Even More Expensive Now
China Railways high-speed train
We can thank China that gasoline prices aren't higher than they are.
By last month, China had cut imports of oil by three million barrels a day, the daily consumption of Italy and France combined. China's economy, meanwhile, hums along.
Americans agonize over how the price of oil affects gas at the pump. Were it not for China, a tank of gas would cost considerably more. "China is Propping Up the World Economy by Importing a Lot Less Oil," reads a Wall Street Journal headline.
There are several reasons China has been able to cut oil imports, but one is its move away from gas-powered vehicles into electric vehicles. China has also invested heavily in electric-powered high-speed rail, letting travelers replace oil-guzzling short flights and trips in gas-powered cars with train travel. By 2030, China's EVs could displace 2.7 million barrels a day, according to the International Energy Agency.
If the war with Iran is truly over, and it may not be, Americans' price of oil should be coming down. That's already started, but economists warn that the decline will be slow.
Thus, Donald Trump's long crusade against electrified vehicles and promotion of gas-powered ones is hard to explain other than his personal ties with the oil industry. The U.S. is producing more fossil fuel, but much of it is being exported to other countries willing to pay a lot for it. Get this: If Americans want more of their fuel to stay home, they'll have to pay more for it.
Trump hollers that Americans must drill-drill-drill to cushion themselves from the cost of foreign energy. And so what did he do first day back in office? He ordered the Energy Department to restart exports of American-produced natural gas. He also supports exporting U.S. oil, branding it as "energy dominance."
Other than environmentalists, and bless you all, Americans tend not to care what powers their cars. Electricity, gasoline, whale oil ... Buyers of cars or trucks generally prefer whichever option is cheaper. Happily, the energy source that does least damage to the planet is now the less expensive one.
True, it costs more to make electric vehicles than gas-powered ones. However — and this is a big however — the cost to operate EVs is a lot less. And the more gasoline costs, the better the electric car deal becomes.
A Chevy Equinox EV costs about $35,000, but the price for the gas-powered version of the compact SUV is $30,000. But if an Equinox owner in, say, Iowa drives about 11,000 miles a year — the American average — over 10 years, they will be spending nearly $10,000 more to power the gas SUV than the electric one.
We get it. If you must have a new Chevy Equinox right now and can't spare an extra $5,000, then the gas version may be regarded as a necessary purchase. What happens 10 or 15 years down the road can be worried about later.
Electricity prices had also been going up, but nowhere near as much as oil prices. That's because power plants use energy sources other than oil, including hydro, wind, solar and nuclear, in addition to natural gas.
But those who can plan for their economic future should be onto it. And so are countries that do planning, such as China. The U.S. tried under President Joe Biden to electrify the economy, but Trump has undermined almost all that progress. What's promoting American consumers' new interest in electric vehicles is the high price of gasoline.
If this country had made the kind of advances China has, we wouldn't be caring so much about what happens in the Strait of Hormuz. On some things, China knows better.
Froma Harrop is an award winning journalist who covers politics, economics and culture. She has worked on the Reuters business desk, edited economics reports for The New York Times News Service and served on the Providence Journal editorial board.
Reprinted with permission from Creators.
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