How will the war in Iran affect our energy bills?

In addition to the immense human suffering caused by the “war of choice” in Iran, a large portion of global fossil fuel infrastructure has been destroyed, damaged, or shut down. Roughly 20 percent of total fossil fuel supply has been curtailed, causing immediate energy shocks worldwide.

Energy analysts are calling this the biggest energy crisis the world has ever experienced, and much more significant than the oil crisis of the 70’s. Just weeks into this war, parts of Asia and Europe have already imposed massive energy rationing campaigns. Analysts expect the impacts we will feel in the US will vary by fuel type.

Gasoline prices see immediate and dramatic increases

The main impact here has been the swift rise in gasoline prices, which react immediately to world oil markets. Average pump prices have risen from $3/gal to over $4/gal in the last month, and continue to creep upward. Larger price increases occurred during the early stages of the Ukraine war, even though a much smaller percentage of the world’s oil supply was affected. US prices are expected to rise further and stay high for months, with some experts projecting that gas could hit $7/gal if the conflict continues for several more weeks.

Natural gas prices are less impacted but volatile

The destruction and shutdown of Liquid Natural Gas (LNG) facilities, along with disruptions to shipments through the Strait of Hormuz, has sent LNG prices soaring in Asia and Europe. Experts estimate it could take several years to restore LNG systems to pre-war production levels. However, unlike global oil markets, natural gas markets are more fragmented and localized. Due to this, and our domestic natural gas production, the US is somewhat shielded from the high LNG prices that are having devastating impacts on countries that import LNG. This should minimize increases in US natural gas utility bills, but as we experienced during the Ukraine war, high global LNG prices and increased US LNG exports tend to push US domestic natural gas prices higher, which could raise natural gas utility bills later this year.

Electricity prices are the least affected

While US electricity prices have been rising due to data center demand, new transmission costs, and wildfire mitigation, electric utility bills should be the most resistant to war-related increases. The Ukraine war caused a very modest rise in electric rates. This is because nearly 60% of electricity generation comes from renewables, nuclear, hydro, and coal which are not affected by this energy crisis, and natural gas generation uses methane extracted in the US.

So, while we will be seeing price increases everywhere due to the war, from food to commodities to energy, with destabilizing impacts on global economies reliant on LNG imports, the biggest energy impacts in the US will be seen at the gas station. Gasoline prices could conceivably double from pre-war levels, and are likely to stay high for months.

This conflict is an urgent reminder of the need to accelerate the transition to safer, lower-cost, and more widely available renewable energy. This is true for individuals and for entire countries, to avoid the economic and environmental costs of fossil fuels, and the national security risks inherent in their uneven distribution.

Find out how to upgrade to clean electric solutions for more comfort, lower energy bills, and dramatically lower carbon pollution!

Save thousands of dollars per year

Gasoline-powered cars waste around 80% of their energy, due primarily to heat losses from combustion. EVs have negligible heat losses and recharge their batteries through braking, so only 11% of battery energy is lost. This means EVs are much more energy-efficient than gas cars, translating into more miles per dollar of fuel.

With gasoline prices rising, this miles-per-dollar EV advantage is getting more dramatic. The below comparison between two identical Hyundai vehicles driven in Oregon - one with a gasoline engine, the other an EV - demonstrates that before the Iran war, the EV would travel nearly 4 times the distance with the same dollar amount of fuel. As gasoline prices shoot upwards, the EV miles-per-dollar advantage could rise to 5X over gas cars.

This dramatic difference in fuel efficiency translates to big energy bill savings. An EV driven the average annual distance in Oregon will save the owner over $2,000 per year in fuel costs compared to a gasoline-powered car with average fuel economy driven the same distance. Additional savings come from the near lack of maintenance required for EVs. While these savings will vary depending on the relative price of electricity and gasoline where you live, driving an EV will save money everywhere in the country.

Used EVs are currently a bargain

Losing the federal EV tax credit put a damper on new EV sales, but used EV sales are way up. As more used EVs have become available, prices have dropped, bringing average used EV prices to near parity with used gas cars. On average, a used EV is one year newer, with 30,000 fewer miles than a similar priced used gas car, making it a better value. For buyers worried about battery life, several recent studies show EV batteries degrade less than anticipated, and are expected to last beyond the service life of the car.

Find more tips and information about EVs!

Webinar: April 21st, 12 Noon PT

Learn what info you need to choose the heat pump system that will keep you comfortable and keep your electricity bill as low as possible.

Upgrading your HVAC system is a big investment, so it’s important to review multiple contractor quotes to ensure you’re installing the right system for your home. But even the best contractors may not automatically provide all the information you need in a format that makes it easy to compare options.

In this webinar, we’ll talk with experienced heat pump installers to learn how you can navigate this process to ensure the best outcome, including:

What to discuss with potential contractors, including what to ask, and what to share about your home and comfort issues.
How to differentiate one quote from another, including price, equipment, performance specifications, and potential energy savings.
How to request information that enables you to make an apples-to-apples comparison between different manufacturers and system options.
What you need to know from the contractor for homes in warm climates versus cold climates.
Why it is important to know when backup resistance heating will be needed and if you can avoid that added operating cost.

Whether you live in a warm climate where cooling is your top priority, or a colder climate where heating performance will be critical, it’s important to ask the right questions to ensure you get the best results. Join us on April 21st for specific tips and advice for getting the best heat pump fit for your home.

Register now for the upcoming webinar!

Get an electrification coach!

If you live in the Portland, Bend, or Corvallis metro areas, you can kickstart your electrification journey by signing up for a free personal coach from Electrify Oregon to help you identify your priorities, create a plan, find trusted contractors, and take advantage of available incentives.

If you have questions or comments, or need some advice about electrification in your home, please contact us at: brianstewart@electrifynow.net

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