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Will EV and hybrid sales suffer if gas prices fall in 2013?

gas pump fuel efficient carsRelief at the pump could be on the way, according to the U.S. Energy Information Administration (EIA). A report issued by this government agency says gas prices in 2013 will be $0.19 lower than they were in 2012.

The average price of a gallon of gasoline in 2012 was $3.63, but the EIA expects it to drop to $3.44 in 2013. That’s a significant difference, considering that gas prices rose $0.10 from 2011 to 2012. The EIA also expects prices to drop to $3.34 per gallon in 2014.

Last year’s gas prices may have been the result of unique circumstances, not an overall trend, and that’s why the EIA thinks they will drop in 2013. According to the EIA, the spike in prices from 2011 to 2012 was the result of “isolated refinery outages,” and a shortage of inventory on the East and West coasts. Crude oil prices remained roughly the same from 2011 to 2012, the agency says.

Average gas prices have already started to decline. In September 2012, Americans were paying an average of $3.85 at the pump, but in December 2012 they were paying $3.31.

The price of on-highway diesel fuel (as opposed to distillate fuel used for home heating) is expected to fall from the 2012 average of $3.97 in 2012 to $3.87 in 2013. Again, it marks a significant reversal: diesel prices rose by $0.13 from 2011 to 2012. Diesel will continue to be more expensive than gasoline, and is expected to cost $3.78 per gallon in 2014.

There aren’t many natural gas-powered cars on the road, but their drivers will have to keep an eye on the cost of their fuel. Natural gas cost an average of $11.01 per thousand cubic feet in 2011 and $10.74 in 2012, but it is expected to cost $11.32 in 2013 and $12.02 in 2014. One gallon of gasoline is equal to 126.67 cubic feet of Compressed Natural Gas (CNG).

A lot can change over the course of a year, but if gas prices do remain it will be interesting to see how that will affect green cars. As gas prices deflated through 2012, the Chevrolet Volt plug-in hybrid racked up a steady increase in sales, while the all-electric Nissan Leaf bogged.

Chevy sold 23,461 Volts in 2012, an increase of 205.8 percent over 2011. Nissan sold 9,819 Leafs, an increase of 1.5 percent over 2011.

Electric cars’ long charging times and relatively short ranges have caused some carmakers, notably Audi and Toyota, to reconsider their plans for battery-powered vehicles. If gas prices continue to fall, most consumers’ main reason for buying an electric car will be less compelling.

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Stephen Edelstein
Stephen is a freelance automotive journalist covering all things cars. He likes anything with four wheels, from classic cars…
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