Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. I was reporting in
Speaker 1: San Francisco yesterday and went passed the service station where
Speaker 1: the cheapest getass was six dollars and a sixty one
Speaker 1: cents a gallon, which translates into about one hundred dollars
Speaker 1: to fill your average car.
Speaker 2: California has some of the most expensive gas in the country,
Speaker 2: but since the US and Israel attacked Iran in late February,
Speaker 2: the average cost of a gallon of gas in the
Speaker 2: US has steadily climbed. It's now nearly four dollars a gallon,
Speaker 2: up from a five year low. As oil and gas
Speaker 2: supplies are disrupted and conflict continues in the Middle East,
Speaker 2: Bloomberg reporters Todd Woody and oxshot Roti are tracking how
Speaker 2: consumers around the world are starting to feel the effects.
Speaker 3: European gas prices have gone up thirty, sixty, even one
Speaker 3: hundred percent, depending on where it's being consumed in Europe.
Speaker 3: The worst hit, I will say, are Asian economies, places
Speaker 3: like Pakistan, which depend a lot on LNG coming from Qatar, Bangladesh, Japan,
Speaker 3: South Korea, even China.
Speaker 2: To some extent, President Donald Trump has been sending mixed
Speaker 2: signals about whether the war with Iran is going to
Speaker 2: drag on or nearing its end.
Speaker 3: We have a very serious yesse of making a deal
Speaker 3: that doesn't guarantee anything.
Speaker 1: I'm not guaranteeing anything.
Speaker 2: On Monday morning, Trump posted that the US has been
Speaker 2: having quote very good and productive conversations with Iran about
Speaker 2: a resolution to the war, and that he had instructed
Speaker 2: the Department of Defense to postpone strikes on Iranian power
Speaker 2: plants and energy infrastructure for the next five days. The
Speaker 2: price of oil dropped on that news. Then Iranian media
Speaker 2: reported that there are no talks between Tehran and Washington.
Speaker 2: Oil prices climbed a bit. The turbulence in the oil
Speaker 2: and gas market and uncertainty over how high prices may
Speaker 2: climb has gotten some people thinking about energy alternatives.
Speaker 1: I think one thing that's hard to really know quantify
Speaker 1: is what is the psychological effect of these wars, And
Speaker 1: this is the general instability and chaos over the last
Speaker 1: couple of years, regardless of whether they see really high
Speaker 1: gas prices at the moment, they think and really should
Speaker 1: get ready for the future. And my relation beats so
Speaker 1: dependent on energy systems that could really drive up my bills.
Speaker 2: I'm Sarah Holder, and this is the big take from
Speaker 2: Bloomberg News today on the show, how shocks to the
Speaker 2: oil and gas market are driving interest in electric vehicles
Speaker 2: and solar panels, and what prolonged conflict in the Middle
Speaker 2: East could mean for the future of renewable energy. Akshat Todd,
Speaker 2: you've both written about how people are responding to these
Speaker 2: high higher oil and gas prices and these chalking headlines
Speaker 2: about the potential for them to get even higher. Some
Speaker 2: of these people are taking it as a sign to
Speaker 2: think about weaning off gas and go out and get
Speaker 2: an electric vehicle. Todd, what has your reporting found about
Speaker 2: the spike and interest in evs and where is it
Speaker 2: showing up.
Speaker 1: There's definitely been a big spike in searches for evs
Speaker 1: and hybrid cars since February twenty eighth. We don't have
Speaker 1: sales data yet, no, if that's translating that and doylically,
Speaker 1: people are more people showing up the dealerships to check
Speaker 1: out the cars. But economists I've spoken to say that
Speaker 1: people tend to really pay attention to the gas prices
Speaker 1: around the time they're thinking about buying a car, So
Speaker 1: that could change. If these prices become sustained over a
Speaker 1: period of months, then you might get people thinking, oh,
Speaker 1: maybe I should switch to an EV versus having that
Speaker 1: as an option of the time they need to replace
Speaker 1: their car.
Speaker 3: The story, I think is more attractive for a drivers
Speaker 3: because regardless of the price of oil, uptake of EV's
Speaker 3: has been higher in many Asian countries than even European
Speaker 3: or American markets, and I think that is likely to accelerate.
Speaker 3: We've had reporting from our colleagues in Asia showing that yes, again,
Speaker 3: number of people showing up to showrooms has gone up,
Speaker 3: but actually some of the early sales figures that we're
Speaker 3: getting from anecdotes are showing that numbers of cars electric
Speaker 3: cars being sold has doubled or even tripled in some markets.
Speaker 2: One of the things that could shape our understanding of
Speaker 2: how this oil price hike might affect the EV market
Speaker 2: is looking back to history. Right after Russia invaded Ukraine,
Speaker 2: for example, oil prices spiked, were more people looking to
Speaker 2: buy evs in the US?
Speaker 1: And did they? There was about a sixty six percent
Speaker 1: spike in sales in twenty twenty two. I think it
Speaker 1: was probably a bigger shock. Also because gas prices had
Speaker 1: been low before that time, and so when they really
Speaker 1: shot up in twenty twenty two, people really switched to
Speaker 1: EV's and at the time there was seventy five hundred
Speaker 1: dollars federal tax credit for the cars. I think one
Speaker 1: factor that's different this time around is that there's increasing
Speaker 1: supply of used evs, which are quite cheap because evs
Speaker 1: have a huge creation loss after they're sold, so it's
Speaker 1: quite possible to buy a used DV for like thirty
Speaker 1: thousand dollars that's two or three years old. I think
Speaker 1: that's probably going to drive sales as well.
Speaker 2: This new consumer interest in evs is coming at a
Speaker 2: rough moment for the EV industry. The Trump administration let
Speaker 2: the EV tax credit expire. We've seen some auto companies
Speaker 2: walk back their plans for EV investment as sales were lagging.
Speaker 2: How big of an opportunity then, does this moment represent
Speaker 2: for these businesses.
Speaker 1: I'm a makers have long time spans, so they're not
Speaker 1: going to change their plans because of a spike and
Speaker 1: oil prices. Gasoline prices right now, I meant that it
Speaker 1: was sustained for a much longer period of time, but
Speaker 1: they've just taken huge charges against their EV businesses to
Speaker 1: discontinue some models and reconfigure factories. So I don't believe
Speaker 1: they're going to turn on a dime. They say there's
Speaker 1: sufficient supply BB's right now, so it doesn't seem to
Speaker 1: be an issue, and I don't think you're going to
Speaker 1: see them US manufacturers at least change their plans immediately.
Speaker 2: What about in markets like in Asia Akshat, where there's
Speaker 2: a different story playing out. How might this change longer
Speaker 2: term plans for those companies.
Speaker 3: So we are already seeing one of our colleagues went
Speaker 3: to a car dealership saying that our waiting list is
Speaker 3: growing and our biggest challenge now is ensuring that we
Speaker 3: get enough supply. Now that anecdote also is reflected in
Speaker 3: stock prices. We've seen Asian electric car or stock prices
Speaker 3: really rise over the last month. So there is clearly
Speaker 3: a growth story for Asian electric car makers that I
Speaker 3: suspect the European automakers, if not the American ones, will
Speaker 3: be looking at and they might factor that into their
Speaker 3: longer term decisions. Because we are seeing the Asian automakers
Speaker 3: start to take on parts of the market that used
Speaker 3: to belong to the Japanese, to the European, the American
Speaker 3: auto companies.
Speaker 2: Well, I also want to talk about some of the
Speaker 2: other ways consumers might be shifting their habits or thinking
Speaker 2: about shifting their habits to adapt to rising energy costs.
Speaker 2: Are you seeing people look into alternative ways to heat, cool,
Speaker 2: and power their homes.
Speaker 3: To some extent, So we have reporting here in the
Speaker 3: UK and in Germany again to places that have in
Speaker 3: recent years seen power prices spike because of gas prices spiking,
Speaker 3: and there has been more awareness among the people that
Speaker 3: there are alternatives available in heat pumps, in rooftop solar,
Speaker 3: and so we've seen something like a thirty percent increase
Speaker 3: in interest among buyers for these products. But there is
Speaker 3: still a challenge that there are not enough installers. People
Speaker 3: are still not aware of the quirks of moving from
Speaker 3: a boiler to a heat pump. They don't know whether
Speaker 3: they'll be able to get repairs done as easily as
Speaker 3: when the boiler breaks down because there are more boiler
Speaker 3: engineers available to fix things. So there is still a
Speaker 3: public education that needs to happen. But power prices do
Speaker 3: factor in do their decisions, and again, like in the
Speaker 3: EV story. If you're about to replace your gas boiler
Speaker 3: because it's old, now this would be the moment to
Speaker 3: speed up that decision.
Speaker 2: Todd, how might people's calculus around buying an EV or
Speaker 2: installing a solar panel changed? The longer this conflict goes on.
Speaker 1: They will be knock on effects. So right now, no
Speaker 1: one's going to go spend fifty thousand dollars on a
Speaker 1: solar array on their house, even if they're sort of
Speaker 1: nervous about the future. However, if people start to buy
Speaker 1: more evs, what tends to happen is they charge at home,
Speaker 1: discover electricity bills getting up thirty percent. That's when they
Speaker 1: get solar. So the solar installers that I talk to
Speaker 1: expect that to happen. Is it happens in the past
Speaker 1: when people buy cars. Then once they put on the
Speaker 1: solar panels, then they go, oh, I actually get a
Speaker 1: heat pump because then basically powering everything from the sun.
Speaker 1: So if prices stay high for a month's on end
Speaker 1: and there's definitely a spike in EV sales, you're probably
Speaker 1: seeing down their line a spotic in solar installations and
Speaker 1: heat pumps and other electrical devices as they replace natural
Speaker 1: gas appliances.
Speaker 2: Coming up as the price of oil surges, the math
Speaker 2: on renewable energy is changing for governments around the world.
Speaker 2: We've talked about how consumers and companies are responding to
Speaker 2: the high price of gas right now and these energy
Speaker 2: price spikes, but akshot, how do you see governments thinking
Speaker 2: about this moment as it relates to energy policy at
Speaker 2: a high level. Are we at the point yet where
Speaker 2: leaders are looking to shore up alternative energy infrastructure or
Speaker 2: are they more focused on finding other ways to bring
Speaker 2: gas prices down.
Speaker 3: It really does depend on country to country. If you're
Speaker 3: a country that is immensely dependent on importing almost all
Speaker 3: of your fossil fuels, then yes, you are looking for alternatives.
Speaker 3: In other countries, like in India and China, for example,
Speaker 3: where there is an alternative available to gas in coal,
Speaker 3: you will see increase in coalburn. We saw that during
Speaker 3: the last gas price crisis after Russia attack Ukraine that
Speaker 3: coalburn went up in India, it went up in China.
Speaker 3: But it's only available to the countries that have coal
Speaker 3: in their mix, and so we are going to start
Speaker 3: to see governments make those choices. Now, do they make
Speaker 3: policies that last long and do they make policy that
Speaker 3: would sustain the momentum for these clean energy products. That
Speaker 3: remains to be seen.
Speaker 2: Did we see this dynamic after Russia invaded Ukraine in
Speaker 2: twenty twenty two, and how long did the interest and
Speaker 2: alternative energies last at the consumer level?
Speaker 3: At a country level, we can see the data and
Speaker 3: it's actually quite clear because what happened in Europe specifically
Speaker 3: is that there was a concerted understanding among governments that
Speaker 3: they want to get rid of their dependence on Russian
Speaker 3: fossil fuels, and they had really three options in front
Speaker 3: of them. Try and get fossil fuel from other places
Speaker 3: like the US, which would come in the form of
Speaker 3: liquified natural gas, which is more expensive, and so they did,
Speaker 3: and they paid a lot of money for that. Cut
Speaker 3: the use of gas, which also they did some of
Speaker 3: the industry shut down, but really households also reduced their
Speaker 3: gas use. But it's really this is the first type
Speaker 3: of energy crisis where there's this third option of going
Speaker 3: to clean energy, and Europe really did to pull off
Speaker 3: an accelerated deployment of renewables in that time. So bluemackenniaf
Speaker 3: data that we've looked at showed something like a forty
Speaker 3: percent spike in solar panel deployment the year after the
Speaker 3: Ukraine crisis in twenty twenty three. And it's not a
Speaker 3: story that just remained in Europe. We also saw this
Speaker 3: happen in developing countries. So Pakistan has had some of
Speaker 3: the most spectacular growth in solar and then a year
Speaker 3: later in batteries purely driven by a gas price spike.
Speaker 2: What does history tell us about how long or how
Speaker 2: quickly these energy adaptations can happen and how long they
Speaker 2: can help countries be resilient.
Speaker 3: So one of the things that analysts always complain about
Speaker 3: is that countries tend to forget the lessons of a crisis.
Speaker 3: So solar installations in Europe have largely plataued from the
Speaker 3: time when they spiked after Russia attacked Ukraine. We also know,
Speaker 3: for example, in Pakistan, despite this amazing rollout of solar
Speaker 3: and batteries, it's actually causing all sorts of problems on
Speaker 3: the grid because suddenly people are producing so much of
Speaker 3: their own power that they're consuming less from the utility,
Speaker 3: and the utility has all these fixed assets in the
Speaker 3: grid in power plants that it is built that it
Speaker 3: needs to find ways to pay for and it currently doesn't.
Speaker 3: So now the utility is looking to lobby the government
Speaker 3: to slow down this rollout of solar that is happening
Speaker 3: in the country, which is essentially a chaotic transition rather
Speaker 3: than a much more planned one.
Speaker 2: So there are all these reasons governments could be moving
Speaker 2: towards clean energy right now. The US, though, appears to
Speaker 2: be doubling down on oil. The Trump administration temporarily lifted
Speaker 2: sanctions on Russian oil already in transit, it's releasing more
Speaker 2: petroleum from the strategic Reserve. What could the longer term
Speaker 2: effects of these kinds of moves be? Does it further
Speaker 2: solidify the US's reliance on fossil fuels even in the
Speaker 2: midst of these energy price shocks.
Speaker 3: So these are short term measures to try and tame
Speaker 3: the price of oil. When the strait of horm moves
Speaker 3: has been closed for three weeks, something like eight million
Speaker 3: barrels a day of oil supply is not available. That
Speaker 3: is about eight percent of global oil supply. We know
Speaker 3: prices are rising as a result, So what can you
Speaker 3: do in the short term While you can try and
Speaker 3: inject some of that available oil outside of the Strait
Speaker 3: of horm moves into the system. So taking off sanctions
Speaker 3: from Russian oil allows for that. The strategic Petroleum Reserve,
Speaker 3: which exists now in many countries because the International Energy
Speaker 3: Agency was created after an oil crisis specifically with the
Speaker 3: goal of having this reserve to avoid dealing with these
Speaker 3: kinds of crises, is being tapped, but it is also
Speaker 3: still very limited. It might provide maybe two hundred days
Speaker 3: worth of oil supply if everything is to happen. That's
Speaker 3: covering you for a few months. There's also some conversation
Speaker 3: now to try and remove sanctions on Iranian oil that
Speaker 3: again will help you tame some of it for some time.
Speaker 3: Those are all short term fixes that will run out eventually.
Speaker 2: I just want to pause and reflect for a second
Speaker 2: that we've been talking almost exclusively about the economic motivations
Speaker 2: driving the adoption of renewable energy, not the environmental benefits,
Speaker 2: and that strikes me as a big shift from the
Speaker 2: conversation even a few years ago.
Speaker 3: One hundred percent because in the initial parts of trying
Speaker 3: to build the energy transition and clean energy products solar
Speaker 3: and wind power and batteries and electric cars were just
Speaker 3: a lot more expensive than the alternative, and so governments
Speaker 3: had to find ways to subsidize it force either states
Speaker 3: or their own grides to become cleaner. And those were
Speaker 3: just expensive ways of trying to get to a place
Speaker 3: where we are now, where these clean energy products are
Speaker 3: cheap and are affordable and are even the economic option
Speaker 3: for you. And so we are seeing an adoption at
Speaker 3: a level that is driven by economics first and climate
Speaker 3: second that we hadn't seen in the past.
Speaker 2: This is The Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 2: To get more from The Big Take and unlimited access
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Speaker 2: Thanks for listening. We'll be back tomorrow.
Speaker 3: Thank you.