What happens if fuel will hit $5.00 per gallon? report image

A station in the Point Loma section of San Diego is charging an amazing $5.05 a gallon, according to GasBuddy.com, a normally reliable website where consumers go to report the prices they are finding.

As of Monday, the average price for a gallon of regular unleaded gasoline in the Chicago area is $4.11, compared with $3.71 a month ago, and about $3.10 a gallon at this time a year ago.

Deloitte shows that 78 percent of consumers in the United States would consider purchasing an electric vehicle (EV) when fuel prices reach $5.00 per gallon. The study, “Gaining traction: Will consumers ride the electric vehicle wave?,” surveyed 12,000 consumers globally, including more than 1,000 in the U.S., and finds that the higher the price of fuel, the more interested consumers are in EVs.

The Deloitte survey reveals that consumer expectations, when combined in China, United States, Europe and Japan for EV range, is two to three times (200 to 300 miles) the current market offerings (100 miles) from major automotive manufacturers.

And, the expectations for the majority of consumers in these markets is a charging time of two hours or less (60 percent in the United States, 55 percent in China, 67 percent in Europe, and 81 percent in Japan) compared to the expected eight hour charge time (required using Level II chargers with a 24 kWh battery pack) typical for current market offerings.

Currently, hybrids and EVs represent a tiny fraction of total cars on the road globally. The adoption of all forms of green vehicles—hybrids, EVs, etc.—will be significantly influenced by government policies that will heavily shape the portfolio mix of powertrain technologies in each country. These policies will likely be driven by a number of factors, from stricter carbon emission standards to independence from foreign energy.

“It’s painful,” said Lamar Magee. “You’ve got to make a decision on where you drive and where you go nowadays.” He said he is “definitely” making changes to his routines.

Magee says it will cost him about $120 to fill up the 30-gallon tank on his van.

And, with violence in Libya and the Middle East sending oil prices even higher, gas prices have soared in the past several weeks to near $4 per gallon. Now, several petroleum industry analysts say gas prices could reach record prices this summer, even hitting $5 per gallon.

Tom Kloza, chief oil analyst with Oil Price Information Service says Americans will see gasoline prices hit the $5 a gallon mark in the next decade, but not by 2012.

“That wolf is out there and it’s going to be at the door…I agree with him that we’ll see those numbers at some point this decade but not yet.” Kloza said.

But how about the economy?

“The demand is still sluggish enough in some of the mature economies.”

Energy costs have a huge impact on businesses, both consumer and B2B. Economists say high oil and gas prices affect more than just prices at the pump, and can hit everything from transportation to exports and even consumer spending.

“Back in ’08, our U.S. crude also was trading at about $100 a barrel as it is today for about six months, and that was right before our world economy imploded,” Palin said. “And now here we are back again, so [Obama’s] timing – his destructive timing – of locking up 97 percent of our off-shore and not allowing ANWR to be touched, not allowing domestic drilling to take place to the degree that it should, it is terrifying where he is leading us in terms of being at the mercy of foreign regimes that would seek our demise to produce energy for us.”

$5 per gallon gas would surely cause extreme pain in the economy, as well as destroy business budgets, potentially forcing layoffs.

“Unfortunately, also, high gas prices – or high crude oil prices tends to increase unemployment, because companies can’t afford to stay in business,” Hofmeister said.

With unemployment at 9.8 percent, higher energy costs are the last thing America needs.

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    I own a delivery service and $5 gas will kill my buisness due to the fact I will, once again, have to raise my rates. This is insane.

    William :(