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Speaker 1: Hi, It's sucksh Fossil fuel prices have shot up since

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Speaker 1: the war in the Middle East broke out. We are

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Speaker 1: now living through the second energy shock of the decade.

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Speaker 1: This time, however, consumers have a choice in alternative sources

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Speaker 1: of energy. Are they taking it? That's what I discussed

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Speaker 1: on this week's Big Take podcast Take a Listen.

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Speaker 2: Bloomberg Audio Studios Podcasts Radio News. I was reporting in

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Speaker 2: San Francisco yesterday and one passed the service station where

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Speaker 2: the cheapest get asked was six dollars and a sixty

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Speaker 2: one cents a gallon, which translates into about one hundred

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Speaker 2: dollars to fill your average car.

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Speaker 3: California has some of the most expensive gas in the country,

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Speaker 3: but since the US and Israel attacked Iran in late February,

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Speaker 3: the average cost of a gallon of gas in the

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Speaker 3: US has steadily climbed. It's now nearly four dollars a gallon,

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Speaker 3: up from a five year low. As oil and gas

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Speaker 3: supplies are disrupted and conflict continues in the Middle East,

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Speaker 3: Bloomberg reporters Todd Woody and akshat Rati are tracking how

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Speaker 3: consumers around the world are starting to feel the effects the.

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Speaker 1: European gas prices have gone up thirty, sixty, even one

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Speaker 1: hundred percent, depending on where it's being consumed in Europe.

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Speaker 1: The worst hit, I will say, are Asian economies, places

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Speaker 1: like Pakistan, which depend a lot on LNG coming from Qatar, Bangladesh, Japan,

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Speaker 1: South Korea, even China to some extent.

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Speaker 3: President Donald Trump has been sending mixed signals about whether

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Speaker 3: the war with Iran is going to drag on or

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Speaker 3: nearing its end. We have a very serious yesse of

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Speaker 3: making a deal that doesn't guarantee anything.

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Speaker 1: I'm not guaranteeing anything else.

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Speaker 3: On Monday morning, Trump posted that the US has been

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Speaker 3: having quote very good and productive conversations with Iran about

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Speaker 3: a resolution to the war. It instructed the Department of

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Speaker 3: Defense to postpone strikes on Iranian power plants and energy

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Speaker 3: infrastructure for the next five days. The price of oil

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Speaker 3: dropped on that news. Then Iranian media reported that there

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Speaker 3: are no talks between Tehran and Washington. Oil prices climbed

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Speaker 3: a bit. The turbulence in the oil and gas market

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Speaker 3: and uncertainty over how high prices may climb has gotten

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Speaker 3: some people thinking about energy alternatives.

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Speaker 2: I think one thing it's hard to really know quantify

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Speaker 2: is what is the psychological effect of these wars, and

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Speaker 2: this is the general instability and chaos over the last

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Speaker 2: couple of years, regardless of whether they see really high

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Speaker 2: gas prices. At the moment, they think and really should

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Speaker 2: get ready for the future and our relation beats so

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Speaker 2: dependent on energy systems that could really drive up my bills.

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Speaker 3: I'm Sarah Holder, and this is the big take from

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Speaker 3: Bloomberg News today on the show, how shocks to the

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Speaker 3: oil and gas market are driving interest in electric vehicles

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Speaker 3: and solar panels, and what prolonged conflict in the Middle

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Speaker 3: East could mean for the future of renewable energy. Okhot Todd,

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Speaker 3: you've both written about how people are responding to these

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Speaker 3: higher oil and gas prices and these chalking headlines about

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Speaker 3: the potential for them to get even higher. Some of

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Speaker 3: these people are taking it as a sign to think

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Speaker 3: about weaning off gas and go out and get an

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Speaker 3: electric vehicle. Todd, what has your reporting found about the

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Speaker 3: spike and interest in evs and where is it showing up.

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Speaker 2: There's definitely been a big spike in searches for evs

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Speaker 2: and hybrid cars since February twenty eighth. We don't have

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Speaker 2: sales data yet. No, that's translating that and doylically. People

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Speaker 2: are more people showing up the dealerships to check out

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Speaker 2: the cars. But economists I've spoken to say that we

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Speaker 2: buil tend to really pay attention to the gas prices

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Speaker 2: around the time they're thinking about buying a car, so

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Speaker 2: that could change. If these prices become sustained over a

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Speaker 2: period of months, then you might get people thinking, oh,

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Speaker 2: maybe I should switch to an EV versus having that

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Speaker 2: as an option of the time they need to replace

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Speaker 2: their car.

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Speaker 1: The story I think is more attractive for Asian drivers because,

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Speaker 1: regardless of the price of oil, uptake of EV's has

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Speaker 1: been higher in many Asian countries than even European or

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Speaker 1: American markets, and I think that is likely to accelerate.

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Speaker 1: We've had reporting from our colleagues in Asia showing that yes, again,

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Speaker 1: number of people showing up to showrooms has gone up.

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Speaker 1: But actually some of the early sales figures that we're

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Speaker 1: getting from anecdotes are showing that numbers of cars electric

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Speaker 1: cars being sold has doubled or even tripled in some markets.

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Speaker 3: One of the things that could shape our understanding of

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Speaker 3: how this oil price hike might affect the EV market

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Speaker 3: is looking back to history. Right after Russia invaded Ukraine,

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Speaker 3: for example, oil prices spiked, were more people looking to

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Speaker 3: buy evs in the US?

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Speaker 2: And did they? There was about a sixty six percent

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Speaker 2: spike in sales in twenty twenty two. I think it

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Speaker 2: was probably a bigger shock also because gas prices had

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Speaker 2: been low before that time, and so when they really

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Speaker 2: shot up in twenty twenty two, people really switched to evs.

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Speaker 2: In At the time, there was you know, seventy five

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Speaker 2: hundred dollars federal tax credit for the cars. I think

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Speaker 2: one factor that's different this time around is that there's

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Speaker 2: increasing supply of used evs, which are quite cheap because

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Speaker 2: evs have a huge creation loss after they're sold, so

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Speaker 2: it's quite possible then buy a used DV for like

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Speaker 2: thirty thousand dollars that's two or three years old. I

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Speaker 2: think that's probably going to drive sales as well.

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Speaker 3: This new consumer interest in evs is coming at a

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Speaker 3: rough moment for the EV industry. The Trump administration let

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Speaker 3: the EV tax credit expire. We've seen some autocomeanies walk

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Speaker 3: back their plans for EV investment as sales were lagging.

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Speaker 3: How big of an opportunity then, does this moment represent

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Speaker 3: for these businesses.

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Speaker 2: I'm a makers of long time spans, so they're not

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Speaker 2: going to change their plans because of a spike and

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Speaker 2: oil prices. Gasoline prices right now, I mean that it

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Speaker 2: was sustained for a much longer period of time. But

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Speaker 2: they've just taken huge charges against their EV businesses to

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Speaker 2: discontinue some models and reconfigure factories. So I don't believe

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Speaker 2: they're going to turn on a dime. They say there's

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Speaker 2: sufficient supply of BB's right now, so it doesn't seem

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Speaker 2: to be an issue, and I don't think you're going

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Speaker 2: to see them US manufacturers at least change their plans immediately.

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Speaker 3: What about in markets like in Asia Akshat, where there's

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Speaker 3: a different story playing out. How might this change longer

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Speaker 3: term plans for those companies.

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Speaker 1: So we are already seeing one of our colleagues went

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Speaker 1: to a car dealership saying that our waiting list is

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Speaker 1: growing and our biggest challenge now is ensuring that we

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Speaker 1: get enough supply. Now that anecdote also is reflected in

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Speaker 1: stock prices. We've seen Asian electric car or stock prices

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Speaker 1: really rise over the last month, So there is clearly

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Speaker 1: a growth story for Asian electric car makers that I

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Speaker 1: suspect the European automakers, if not the American ones, will

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Speaker 1: be looking at and they might factor that into their

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Speaker 1: longer term decisions, because we are seeing the Asian automakers

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Speaker 1: start to take on parts of the market that used

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Speaker 1: to belong to the Japanese, to the European the American

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Speaker 1: auto companies.

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Speaker 3: Well, I also want to talk about some of the

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Speaker 3: other ways consumers might be shifting their habits or thinking

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Speaker 3: about shifting their habits to adapt to rising energy costs.

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Speaker 3: Are you seeing people look into alternative ways to heat,

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Speaker 3: cool and power their homes.

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Speaker 1: To some extent, So we have reporting here in the

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Speaker 1: UK and in Germany, again two places that have in

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Speaker 1: recent years seen power prices spike because of gas prices spiking,

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Speaker 1: and there has been more awareness among the people that

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Speaker 1: there are alternatives available in heat pumps, in rooftop solar

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Speaker 1: and so we've seen something like a thirty percent increase

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Speaker 1: in interest among buyers for these products. But there is

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Speaker 1: still a challenge that there are not enough installers. People

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Speaker 1: are still not aware of the quirks of moving from

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Speaker 1: a boiler to a heat pump. They don't know whether

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Speaker 1: they'll be able to get repairs done as easily as

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Speaker 1: when the boiler breaks down because there are more boiler

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Speaker 1: engineers available to fix things. So there is still a

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Speaker 1: public education that needs to happen. But power prices do

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Speaker 1: factor in to their decisions. And again, like in the

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Speaker 1: EV story, if you're about to replace your gas boiler

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Speaker 1: because it's old, now, this would be the moment to

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Speaker 1: speed up that decision.

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Speaker 3: Todd, how might people's calculus around buying an EV or

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Speaker 3: installing a solar panel changed? The longer this conflict goes on.

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Speaker 2: They will be knocked on effects. So right now, no

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Speaker 2: one's going to go spend fifty thousand dollars on a

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Speaker 2: solar array on their house, even if they're sort of

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Speaker 2: nervous about the future. However, if people start to buy

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Speaker 2: more evs, what tends to happen is they charge at home,

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Speaker 2: discover electricity bills got up thirty percent. That's when they

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Speaker 2: get solar. So the solar installers that I talk to

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Speaker 2: expect that to happen. Is it happens to be past

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Speaker 2: when people buy cars. Then once they put on the

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Speaker 2: solar panels, then they go, oh, I actually get a

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Speaker 2: heat pump because I'm basically powering everything from the sun.

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Speaker 2: So if prices stay high for a month's on end

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Speaker 2: and there's definitely a spike in EV sales, you're probably

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Speaker 2: seeing down their line a spotic in solar installations and

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Speaker 2: heat pumps and other electrical devices as they replace natural

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Speaker 2: gas appliances coming up.

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Speaker 3: As the price of oil surges, the math on renewable

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Speaker 3: energy is changing for governments around the world. We've talked

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Speaker 3: about how consumers and companies are responding to the high

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Speaker 3: price of gas right now and these energy price PAGs,

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Speaker 3: but akshot, how do you see governments thinking about this

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Speaker 3: moment as it relates to energy policy at a high level.

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Speaker 3: Are we at the point yet where leaders are looking

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Speaker 3: to shore up alternative energy infrastructure or are they more

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Speaker 3: focused on finding other ways to bring gas prices down.

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Speaker 1: It really does depend on country to country. If you're

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Speaker 1: a country that is immensely dependent on importing almost all

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Speaker 1: of your fossil fuels, then yes you are looking for alternatives.

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Speaker 1: In other countries like in India and China, for example,

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Speaker 1: where there is an alternative available to gas in coal,

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Speaker 1: you will see increase in coalburn. We saw that during

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Speaker 1: the last gas price crisis after Russia attack Ukraine that

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Speaker 1: coleburn went up in India, it went up in China.

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Speaker 1: But it's only available to the countries that have coal

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Speaker 1: in their mix, and so we are going to start

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Speaker 1: to see governments make those choices. Now, do they make

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Speaker 1: policies that last long and do they make policies that

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Speaker 1: would sustain the momentum for these clean energy products? That

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Speaker 1: remains to be seen.

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Speaker 3: Did we see this dynamic after Russia invaded Ukraine in

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Speaker 3: twenty twenty two, and how long did the interest and

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Speaker 3: alternative energies last at the consumer level?

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Speaker 1: At a country level, we can see the data and

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Speaker 1: it's actually quite clear because what happened in Europe specifically

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Speaker 1: is that there was a concerted understanding among governments that

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Speaker 1: they want to get rid of their dependence on Russian

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Speaker 1: fossil fuels. And they had really three options in front

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Speaker 1: of them. Try and get fossil fuels other places like

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Speaker 1: the US, which would come in the form of liquified

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Speaker 1: natural gas, which is more expensive. And so they did,

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Speaker 1: and they paid a lot of money for that cut

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Speaker 1: the use of gas, which also they did some of

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Speaker 1: the industry shut down, but really households also reduced their

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Speaker 1: gas use. But it's really this is the first type

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Speaker 1: of energy crisis where there's this third option of going

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Speaker 1: to clean energy, and Europe really did manage to pull

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Speaker 1: off an accelerated deployment of renewables in that time. So

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Speaker 1: Blue mckennaf data that we've looked at showed something like

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Speaker 1: a forty percent spike in solar panel deployment the year

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Speaker 1: after the Ukraine crisis in twenty twenty three. And it's

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Speaker 1: not a story that just remained in Europe. We also

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Speaker 1: saw this happen in developing countries. So Pakistan has had

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Speaker 1: some of the most spectacular growth in solar and then

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Speaker 1: a year later in batteries purely driven by a gas

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Speaker 1: price spike.

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Speaker 3: What is history tell us about how long or how

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Speaker 3: quickly these energy adaptations can happen and how long they

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Speaker 3: can help countries be resilient.

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Speaker 1: So one of the things that analysts always complain about

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Speaker 1: is that countries tend to forget the lessons of a crisis.

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Speaker 1: So solar installations in Europe have largely plataed from the

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Speaker 1: time when they spiked after Russia attacked Ukraine. We also know,

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Speaker 1: for example, in Pakistan, despite this amazing rollout of solar

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Speaker 1: and batteries, it's actually causing all sorts of problems on

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Speaker 1: the grid because suddenly people are producing so much of

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Speaker 1: their own power that they're consuming less from the utility.

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Speaker 1: And the utility has all these fixed assets in the

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Speaker 1: grid in power plants that it is built, that it

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Speaker 1: needs to find ways to pay for and it currently doesn't.

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Speaker 1: So now the utility is looking to lobby the government

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Speaker 1: to slow down this rollout of solar that is happening

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Speaker 1: in the country, which is essentially a chaotic transition rather

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Speaker 1: than a much more plan.

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Speaker 3: And so there are all these reasons governments could be

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Speaker 3: moving towards clean energy right now. The US, though, appears

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Speaker 3: to be doubling down on oil. The Trump administration temporarily

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Speaker 3: lifted sanctions on Russian oil already in transit, it's releasing

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Speaker 3: more petroleum from the Strategic Reserve. What could the longer

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Speaker 3: term effects of these kinds of moves be. Does it

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Speaker 3: further solidify the US's reliance on fossil fuels Even in

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Speaker 3: the midst of these energy price shocks, So.

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Speaker 1: These are short term measures to try and tame the

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Speaker 1: price of oil. When the Strait of Horrm Moves has

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Speaker 1: been closed for three weeks, something like eight million barrels

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Speaker 1: a day of oil supply is not available. That is

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Speaker 1: about eight percent of global oil supply. We know prices

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Speaker 1: arising as a result. So what can you do in

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Speaker 1: the short term while you can try and inject some

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Speaker 1: of that available oil outside of the Strait of horrm

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Speaker 1: Moves into the system. So taking off sanctions from Russi

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Speaker 1: oil allows for that. The Strategic Petroleum Reserve, which exists

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Speaker 1: now in many countries because the International Energy Agency was

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Speaker 1: created after an oil crisis specifically with the goal of

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Speaker 1: having this reserve to avoid dealing with these kinds of crises,

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Speaker 1: is being tapped, but it is also still very limited.

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Speaker 1: It might provide maybe two hundred days worth of oil

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Speaker 1: supply if everything is tapped. That's covering you for a

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Speaker 1: few months. There's also some conversation now to try and

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Speaker 1: remove sanctions on Iranian oil that again will help you

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Speaker 1: tame some of it for some time. Those are all

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Speaker 1: short term fixes that will run out eventually.

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Speaker 3: I just want to pause and reflect for a second,

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Speaker 3: that we've been talking almost exclusively about the economic motivations

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Speaker 3: driving the adoption of renewable energy, not the environmental benefits,

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Speaker 3: and that strikes me as a big shift from the

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Speaker 3: conversation even a few years ago.

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Speaker 1: One hundred percent because in the initial parts of trying

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Speaker 1: to build the energy transition and clean energy products, solar

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Speaker 1: and wind power and batteries and electric cars were just

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Speaker 1: a lot more expensive than the alternative, and so governments

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Speaker 1: had to find ways to subsidize it force either states

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Speaker 1: or their own grides to become cleaner. And those were

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Speaker 1: just expensive ways of trying to get to a place

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Speaker 1: where we are now, where these clean energy products are

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Speaker 1: cheap and are affordable and are even the economic option

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Speaker 1: for you. And so we are seeing an adoption at

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Speaker 1: a level that is driven by economics first and climate

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Speaker 1: second that we hadn't seen in the past.

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Speaker 3: This is the Big Take from Bloomberg News. I'm Sarah Holder.

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Speaker 3: To get more from The Big Take and unlimited access

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