Only $1.14 per Gallon?

By Michael P. Tremoglie

NEW YORK ( MainStreet) -- The U.S. Department of Energy (DOE) announced last month the launching of the "eGallon" - a tool that will compare the costs of fueling electric vehicles (EVs) to fueling gasoline-powered ones. According to the report, the national average eGallon price is about $1.14.

This means that an EV can travel as far on $1.14 worth of electricity as a conventional vehicle on a gallon of gasoline. The tool also does state by state comparisons as well. So while everyone can currently calculate how much it costs to go to work with a conventional vehicle - now EV drivers will be able to calculate their costs.

"Consumers can see gasoline prices posted at the corner gas station, but are left in the dark on the cost of fueling an electric vehicle," Energy Secretary Ernest Moniz said in the communiqué announcing the calculator. "The eGallon will bring greater transparency to vehicle operating costs and help drivers figure out how much they might save on fuel by choosing an electric vehicle. It also shows the low and steady price of fueling with electricity. Not only can electric vehicles save consumers on fuel and reduce our dependence on oil, they also represent an opportunity for America to lead in a growing, global manufacturing industry."

The DOE says that the electric costs are more stable than gasoline prices because of the difference between the global oil market and electricity generating costs. The price of electric generation is steadier than the fluctuating oil market.

According to DOE, EV sales in the U.S. tripled in 2012. More than 50,000 EVs were sold last year, and sales are growing significantly again in 2013. The increase is ascribed to significant cost reductions and improvements in vehicle performance.

The DOE also noted that the Chevy Volt was highly rated by the Consumer Reports annual owner-satisfaction survey for the second straight year and that the Tesla Model S was awarded the 2013 Motor Trend Car of the Year.

The eGallon is calculated by determining how much it would cost to drive an electric vehicle the same distance as a similar conventional vehicle could travel on a gallon of gasoline. The DOE takes the average distance that a gasoline-powered vehicle can go per gallon - which is 28.2 miles for comparable 2012 model year cars - and then calculates how much it would cost to drive the average EV that same distance.

Since there is some fluctuation in electricity prices from state to state, the eGallon tool calculates costs in each state compared to the cost of gasoline. The DOE claims that "fueling your car with gasoline costs roughly three times more than fueling with electricity."

But not everyone is so certain about the economy of EVs. Marlo Lewis, a senior fellow at the Competitive Enterprise Institute (CEI), says the DOE information may be correct but is completely one-sided.

"They ignore the additional costs associated with electric vehicles impose - costs that overwhelm the obvious fuel savings for most consumers," Lewis asserted.

According to him the costs the eGallon ignores are:
  • (1) Higher vehicle purchase price
  • (2) Limited range
  • (3) The inconvenience of waiting hours to refuel.

He pointed out that the average price paid for a gasoline-powered 2013 Ford Focus ranges from $16,500 to $24,176. While the average price paid for a 2013 Ford Focus Electric is $39,020.

Regarding the range issue, Lewis said - in a May 30 blog he wrote about the subject - "Except for the Tesla Model S, with an EPA-estimated range of 265 miles, most battery-electric vehicles (BEVs) have EPA-estimated ranges of 62 to 99.8 miles -- although motorists may go farther under actual driving conditions, Edmunds.Com reports. These range limitations diminish the utility and, thus, value of BEVs for many consumers, and may induce 'range anxiety' -- fear of being stranded between where you are and where you have to go. The Tesla Model S has an impressive range but, with a manufacturer's recommended sale price of $69,900, most households cannot afford to buy one even with generous federal and state tax rebates."

"Limited range and dramatically longer refueling time diminishes the utility and, thus, the value of electric vehicles for many consumers," Lewis emphasized. "In short, you pay more and get less for your money at least in terms of range and convenience."

He noted that EV proponents often claim that "the barrier to consumer acceptance is a chicken-egg problem." They proffer that more people would buy them if there were a network of charging stations - and companies would build them if more people owned EVs.

"Therefore, they argue, government must intervene with tax breaks and other subsidies to overcome these market 'barriers,' he said.

But Lewis said that the Israelis tried it, "and it was a Solyndra-like flop."

An Israeli company called "Better Place" built a network of charging stations in Israel and Denmark. The company believed that the stations would motivate consumers to buy electric vehicles. But the company closed in under than six years.

Over a hundred years ago the electric car was praised as a quiet, non-polluting method of transportation. But the same problems with EVss mentioned by CEI's Marlo Lewis in 2013 were the same problems that led to their decline in the early 1900s.

--Written by Michael P. Tremoglie for MainStreet