The
fall in Oil Prices benefits consumers but punishes the Oil Producing companies represented
by OPEC (Organization Of Petroleum Exporting Countries) and countries like
Russia who's economies are heavily tied to Oil Production as noted in the
article “Falling oil
prices: Who are the winners and losers?”, published 19 January 2015 by Tim
Bowler, Business reporter, BBC News.
But
what's unknown is how consumers will respond as noted in the article “Where are oil prices headed from here?”,
published 06.02.2015 by John W. Schoen, CNBC.
Like
our American counterparts, the lower Oil Prices translate to lower costs of
Goods and Services in Jamaica, according to the article “Precipitous
Crude Oil Decline Should Benefit Jamaica...”, published Saturday, 7
February 2015, by Nigel Higgins, All About Jamaica View.
To
maximize on the benefits of the lower price of Oil, the PSOJ (Private Sector
Organization of Jamaica) is encouraging the GOJ (Government of Jamaica) to
secure long term contracts for Oil Supply so as to ensure lower prices as noted
in the article “PSOJ
Urges Government To Buy Ahead To Lock In Fuel Prices”, Published Thursday
February 5, 2015 10:21 am, The Jamaica
Gleaner.
This
question is especially important to the makers of All-Electric Vehicles. Turns
out it also benefits their increasing sales projections as state by analyst
InsideEVS as pointer out in my blog article
entitled “InsideEVS
stats says All-Electric Vehicles Growing Strong - 500,000 by 2020 is a
potential Robotic Self-Driving Army”.
Lower Oil Prices Good
for Jamaica - How All-Electric Vehicles Sales benefit despite
If
this excess supply of Oil lasts any longer, many producers of All-Electric
Vehicles manufacturers and Retailers might find themselves holding onto some
huge loans now that fuel prices have fallen as low as US$2.06 per gallon, down
from US$4.00 per gallon according to the AAA (Automobile Association of
America) as noted in the article “Falling Fuel
Resets Electric Car Equation”, Published Sunday January 25, 2015, The Jamaica Gleaner.
That'll
mean lower Electricity Prices as well, making home charging of your All-Electric
Vehicle an option. However, the numbers might appear a bit confusing, given the
high cost of most All-Electric Vehicles.
According
to TrueCar:
1.
US$25,168 for the Ford Focus (Electric)
2.
US$16,695 for the Ford Focus (Gasoline)
3.
US$71,070 for the Tesla Model S
Because
of Federal tax credits of US$7,500 and
local dealer incentive to galvanize sales, these All-Electric Vehicles, purchased
or leased, qualify for discounts along with additional State tax credits and
incentives. An example of a state incentive is California which slashes some
US$2,500 cash off the purchase of a new All-Electric Vehicles.
According
to Irvine, California-based vehicle valuation and automotive research company Kelley Blue Book, the following incentives are
offered for Vehicle purchases:
1.
US$4,159 average for All-Electric
Vehicle in 2014
2.
US$2,791 average for all Vehicle, both
Gasoline and All-Electric in 2014
With
a 68% increase from 2013, it should make All-Electric Vehicles attractive
purchases. That is, until you factor in the cost of the Gasoline and
Electricity for charging and how long it takes you to pay off the premium for
the electric version changes dramatically:
1.
27 years if Gasoline remains at US$2.06
per gallon
2.
8 years if Gasoline remains at US$4.00
per gallon
This
may not be good news to some people, especially as one considers that
All-Electric Vehicles don’t hold their value well over that period of time. By
the time you've paid off the premium, reselling them may be a bit difficult as
the technology may have changed to Hydrogen using PEM (Proton Exchange
Membrane).
That’s
the technology that Nissan may be working on for a Hydrogen Fuel Cell powered
Car with NASA (National Aeronautical and Space Administration) as noted in my blog article
entitled “Nissan,
NASA and Self-Driving Nissan Leaf by 2020 - Little Progress made with Humans
trusting Self-driving All-Electric Vehicles”.
Gasoline vs All-Electric
Vehicles - All-Electric Vehicles will be more in demand than ever
Despite
eight (8) year warranties, the incentives still hurt the images of All-electric
Vehicles, reducing their resale value. Kelley
Blue Book lists the vehicles and the percentage of their value that they
retain after sixty (60) months:
1.
20% for All-Electric Vehicles
2.
50% of Trucks
So
let’s consider a scenario where you lease the All-Electric Vehicle instead of
buying one. Using the Nissan Leaf, an All-Electric Vehicle as an example, the
lease would work out as US$199 for thirty six (36) months or three (3) years.
To put that in perspective against a gasoline powered vehicle:
1.
US$199 for thirty six (36) months or
three (3) years to lease a Nissan Leaf
2.
US$7164 in total for thirty six (36)
months or three (3) years to lease a Nissan Leaf
3.
US$149 for thirty six (36) months or
three (3) years to lease a Nissan Sentra
4.
US$5364 in total for thirty six (36)
months or three (3) years to lease a Nissan Sentra
Clearly,
leasing a gasoline powered vehicle works out cheaper. In fact, for the US$7164
in total for thirty six (36) months or three (3) years to lease a Nissan Leaf,
you could purchase a gas-powered Ford Escape SUV or a Honda Accord sedan.
But
remember that with lower Oil prices it also means Electricity is lower per
kilowatt hour nationally. At the current average of US$2.06 for Gasoline thanks
to cheaper oil, the cost of Residential electricity in the US of A hovers at
around US$0.12 per KWh. At that price, the economics of an All-Electric Vehicle
becomes clear:
1.
US$550 per year to charge the Nissan
Leaf for 15,000 miles of driving
2.
US$950 per year to buy gasoline for a
Nissan Sentra for 15,000 miles of driving
With
the Nissan Sentra having a 33 mpg, which is fairly good for a small car but is
lower that what the Obama Administration had stipulated back in October 2010 as
noted in my blog
article entitled “Alternative
Energy and the President - Three Days of the Condor”, that would work out
to a whopping US$1,816 per year to buy gasoline.
So
albeit the All-Electric Vehicle might have a higher price-tag and a lower
resale value, thanks to the lower rate of Electricity due to cheaper Oil, you
can consolidate your living expenses into one manageable Electric Bill....that
is, if you live in the US of A.
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