When Kevin Ketels bought a 2026 electric Chevrolet Blazer last year, he wasn’t thinking about gas costs. He just thought EVs were better and “wanted to be part of the future.” Now that The war in Iran is something spiking prices at the fuela Detroit man is glad he no longer fills up his 11-year-old gas-powered SUV.
“Electricity can go up, but it won’t go up nearly as much as gas will go up and it won’t go up as fast,” said Ketels, 55, an assistant professor of global supply chain management at Wayne State University.
Experts say prolonged high fuel prices may drive others away EV interest and sales, especially if drivers think that their electricity prices will not be affected by the problems. But many factors influence consumer EV purchases – and electricity rates.
Drivers of gas-powered cars are more vulnerable to price fluctuations caused by global conflicts than those who charge their cars. The national average for a gallon of regular gas this week was $3.57, up from $2.94 last month, according to AAA.
Gasoline prices are soaring as the war in Iran disrupts the flow of oil through the Strait of Hormuz, a key artery for global oil trade. And higher gasoline prices can be expected for the foreseeable future, according to GasBuddy petroleum analyst Patrick De Haan.
Fuel prices are likely to continue to rise as long as security risks remain in the Strait, said De Haan. The features of the upcoming season will also have an impact. Gasoline demand tends to increase as the weather warms and more cars hit the road, while gas stations switch to more expensive summer gasoline, which takes longer to produce and contains additives meant to reduce evaporation during warmer months.
Meanwhile, “residential electricity prices are regulated and less volatile than gasoline prices,” said Davis economics professor Erich Muehlegger at the University of California. “As a result, EV owners are less affected by oil price shocks.”
But experts say electricity prices have been rising nationally for a variety of reasons, including increased demand for power from new data centers.
“This is a deflationary event,” Holt Edwards, principal at Bracewell’s Policy Resolution Group, said of the war. “Is this the driver of electricity prices? I think probably not. But it’s certainly a contributing factor.”
How well the oil and gas conflicts can translate into the energy sector remains to be seen.
When it comes to the electricity an EV owner taps into, much of the cost depends on which sources of electricity are in the local grid’s energy mix, experts say.
Because regulators set residential electricity prices every year, most homes are insulated from month-to-month changes in natural gas costs. Although experts say that higher natural gas prices could increase the cost of generating electricity, natural gas prices have not risen as fast or as quickly as oil prices have.
Those are just two of the many energy sources – including coal, nuclear and renewables – that power the electric grid.
“The energy component varies depending on the energy you use and the amount of energy you use to generate electricity,” said Pierpaolo Cazzola, an energy expert at Columbia University’s Center on Global Energy Policy. “What happens is that in the US, the variation in the price of the energy component is less than in other places.”
Experts say the ongoing war could affect electricity bills in the future. And that’s a big reason countries are turning to clean energy, they say.
“Clean energy and electrification together provide the greatest security,” said Euan Graham, an analyst at energy think tank Ember.
Michael B. Klein, a 56-year-old software developer in Evanston, Illinois, has been driving EVs for the past eight years to save on fuel costs and because of environmental concerns.
Every time the efficiency of the electric grid improves — especially as renewables are added — “I get that benefit no matter what,” said Klein, who drives a Chevy Bolt. “They can improve the efficiency of gas engines, but you have to get a new car to achieve that.”
Several experts say higher fuel prices are a strong driver of EV sales, especially if higher prices persist. Drivers are also considering hybrid cars that are more fuel efficient these days.
Car shopping service Edmunds analyzed consumer purchase data for the week beginning March 2, after the war in Iran began. They found that interest in hybrids, plug-in hybrids and battery EVs accounted for 22.4% of all vehicle research activity on their site that week, up from 20.7% the previous week. Analysts also looked back at a major increase in gasoline prices nationwide in 2022 and saw that consideration for electrified vehicles increased significantly, even then.
But whether this means more EV purchases depends on whether consumers expect savings not only now but also in the future, experts say.
Adding to the complexity: A sudden surge in EV demand could drive up prices, Graham said.
“I think the real change would be if this causes governments to change the tax, tax policies on EVs,” Graham said. Doing this will help reduce fuel dependency, he said.
A lot.
People who buy EVs have a “really big” savings in the life of their vehicles even without the federal tax credit, said Peter Zalzal, a lawyer for the Environmental Defense Fund.
“We’re talking thousands and thousands of dollars” in savings, Zalzal said. “And as the price of gas goes up, those savings are huge. Fuel costs are a big part of the total cost of cars, and the increase in gas prices has a big impact on people.”
However, the upfront cost of a new EV is still higher than that of a gasoline-powered vehicle; new EVs sold for an average of $55,300 last month, and new cars overall sold for an average of $49,353, according to auto shopping service Kelley Blue Book. Some experts have also expressed national security concerns about EVs because China dominates key parts of the EV supply chain.
Ketels, an EV owner and professor, said he believes EVs and renewable energy should be an important strategy for individuals in the US because they can be produced at home “and we don’t have that flexibility and those worries.”
But because the federal government has withdrawn many incentives for both, “it puts us at a disadvantage globally,” Ketels said. “I think it was a terrible mistake to withdraw these incentives and attack the sustainable energy industry,” and the war “makes it very clear.”
