Filling your tank won't break the bank in 2021, and pandemic's not the sole reason
One crumb of comfort amid the pandemic has been the drop in gas prices. A gallon of regular could be bought for less than $2 Friday, compared to the regional average of $2.82 a year ago, according to AAA.
On the other hand, isn't cheap fuel a bittersweet benefit, given it's directly related to COVID-19 requiring millions to work from home and cut back on travel?
To some extent, yes, but there are other reasons for painless pumping in 2020 that will continue in 2021, Argonne National Lab transportation expert Don Hillebrand explained.
Along with supply and demand, lower gas prices now "are a result of a long-term effort on the part of the U.S. government to diversify our fuel sources," said Hillebrand, an automotive engineer and director of Argonne's energy systems division.
Coronavirus stay-at-home orders slashed vehicle miles traveled in America by 26% in the second quarter. Overall in 2020, driving is projected to drop by 14% contrasted with 2019, the U.S. Energy Information Administration reported.
The screeching brakes caught the petroleum industry off-guard this spring. "When you have a surplus, the price has to drop because oil doesn't stop flowing easily," Hillebrand said.
"COVID-19 dropping the VMT by 25% caused a short-term, perhaps even long-term, drop in demand that caused all this fuel to pile up someplace, (creating) a real need to get rid of it," he explained.
It's not that fuel goes bad quickly. "It's just that an (oil) tanker is a very large, expensive asset," Hillebrand said. This spring, tankers ended up anchored in harbors storing oil, not shipping it.
"That's a lot of lost money, a lot of lost investment," he said, and oil producers cut rates accordingly.
Assuming a vaccine shrinks the COVID-19 footprint later in 2021 and brings a return to driving norms in the U.S., will the $2.82 or even $3 gallon return?
Industry analysts expect an uptick in prices as cooped-up drivers hit the road. But the new normal could include a lot more people working from home.
"Speaking for my own organization, we've discovered how much we don't need people in the office all the time," Hillebrand said.
Separate from the pandemic, the cumulative, incremental revolutions in the auto industry such as electric cars will continue to deflate gas prices.
Electric cars constitute about 2% of all vehicles sold in the U.S. but "are a very real threat to the price of oil." said Hillebrand, a former Chrysler executive. "People in the oil business know that the higher the price of oil is, the more it drives their customers to electric vehicles, and so they don't dare run their prices like in the past. People have options."
California's governor this year ordered that all cars sold as of 2035 be zero-emission vehicles. The United Kingdom issued a similar policy but for 2050.
Nationwide, tough fuel economy standards agreed upon between automakers and President Barack Obama's administration in 2011 prompted a plethora of cars with high miles per gallon.
As a result, "everybody now can chose a very highly fuel-efficient car if they want to," Hillebrand said.
Other initiatives driving down gas prices are long-haul efforts such as biofuel mandates on ethanol, for example, and extracting oil through fracking or tar sands instead of traditional methods.
"On the supply side, the amount of fuel we have available from internal and external sources is gigantic now, unlike 15 years ago," Hillebrand said.
One more thing
Argonne researchers are leading the charge on batteries for electric vehicles that are safer, smaller and less expensive than the behemoths used now.
"Batteries improve by 3% to 5% a year either in cost or energy density," Hillebrand said. Another line of research involves stabilizing batteries by using lithium electrolytes composed of solid ceramic or glass to increase dependability.
You should know
Will COVID-19 nix the Chicago Auto Show? Not necessarily. "We are working with our partners at McCormick Place as well as state and city officials to develop a plan that allows us to open the 2021 Chicago Auto Show in a safe and responsible manner," Chicago Automobile Trade Association officials said. "State officials are currently reviewing our plan. While our traditional February dates are unlikely, we are hopeful to be able to stage the show sometime in the spring."