Monday, July 03, 2017

Hoisted by my own petard

This picture of nothing is what used to be my favorite and most-convenient gas station, just a week or so ago. I doubt it'll be replaced by a gas station.

I stand by an argument I made four years ago that EVs will do more than become more convenient as they gain market share - they will create a virtuous cycle of making gas vehicles less convenient because the market supporting the gas engine infrastructure, like gas stations, will shrink.

In my case, there's another gas station almost as convenient as this one, but it only takes debit cards that aren't convenient for me. Others are a little further away, but the point remains that the convenience is decreasing. Gas stations are disappearing around the country - maybe EVs have only played a marginal role in that so far, but I expect they'll play a bigger role in the future, and still the balance between gas and EVs keep shifting.

I think in many or most two-car households, having at least one car be an EV is more convenient than two gas vehicles - you choose the EV for as many trips as possible and charge it up when you park or at home, and waste less time going to gas stations. As 200-mile EV range and fast-charging become standard, and as gas stations keep disappearing, the relative convenience will keep moving towards EVs and the virtuous cycle will accelerate.

UPDATE:  some good comments, as usual.
  •  I agree that increased fuel economy has reduced gas demand and gas station numbers, and that in turn reduces the convenience of gas engines. By itself though it's not a virtuous cycle, except to the extent that gas mileage improves further. Absent further improvement, there should be a stabilized point where the number of stations balance with the new, lower demand.

  • I also agree that factors making land more valuable for uses other than gas stations are the primary motivators so far in reducing station numbers, particularly in dense urban cores. While extraneous, this also reduces gas engine convenience. Like increased gas mileage, it only reduces convenience up to a point as opposed to being a virtuous cycle.

  • Fernando's right that gas stations will (and have) reacted to find non-gas ways to boost sales. As they go further in that direction though, they'll have fewer pumps or no pumps, and the inconvenience will still increase. 

  • Gas engine repair and maintenance will also become less convenient - EVs need less maintenance and different equipment, so fewer mechanics will train on gas engines. Those repair bays will get replaced with expanded coffee shops and (possibly) electric charging stations.

  • While EVs have only a small impact so far on gas demand, they can affect what's happening right now based on people's expectations of the future. Take for example a family business that owns a dozen gas stations, with the parents nearing retirement and kids deciding whether to take over versus having a very different career. Those kids may well be concerned about what EVs will do to the business in 10-15 years (and should be) and tell the parents to sell instead. Anyone else thinking of a 10-year investment knows there's a risk that EVs will significantly hurt the resale value. These EV effects on gas stations are happening now.

  • Not an expert on this, but I'm guessing that ultimately there's not much long-term future for stand-alone EV charging stations replacing gas pumps, except on interstate highways. As EV range gets further and further above 200 miles, and as fast chargers become ubiquitous at work, shopping, and home, there just won't be a need except on highways where lots of people are traveling long distances.

  • And finally, the above is mostly predictive rather than policy-related, but if the virtuous cycle is real then it does have policy implications. Aggressive long-term EV targets are achievable and should be pursued because there's a virtuous cycle effect we have barely experienced yet that will make them work. Outright bans on gas engine sales like those proposed in the future for Norway and elsewhere will be politically feasible because the writing will be on the wall concerning EV superiority.


Greg Wellman said...

I agree with your projection for the future, but my understanding is that current gas station closings are being driven by high real estate prices - you can make more money selling out to a coffee shop than by continuing to sell gas. You can predict the sort of places where this effect is strong and where it is weak ... so gas stations will disappear from the denser areas first. One example:
That story doesn't go into much detail - I suspect that increasing fuel economy in gas powered cars has also contributed to a weakness in the sector. Mass adoption of electric cars will hit like a landslide.

David B Benson said...

The number of gas stations here in Pullman, Washington, has decreased to just 6 despite a more than doubling of the population. Possibly better gas milage explains it as there are very few electric and hybrid vehicles to be seen.

Fernando Leanme said...

Gasoline retail has been a very competitive business for 40 years. Large refiners sell their bulk product to whoever has cash and the right permits, which means entry into the business is fairly easy, almost as easy as opening a convenience store chain or mini market. About 12 years ago I had a retail subsidiary request the use of the conference room assigned to my team, and overheard about two hours of discussions about their ongoing business. The agenda points were about a new campaign to introduce different potato chips, the statistics about bathroom cleanliness, the change of coffe supplier, the car wash attendant salary scale, and topics which had absolutely nothing to do with gasoline sales.

The response has been to increase volume per station and broaden the offer to include a laundry, and a fast food restaurant. I suspect they will be very keen on offering battery charging, because that's going to keep customers buying junk food and playing one armed bandits. And that's where the real profits will be.

Canman said...

I suspect that the revolution in electric vehicles will include on board charging powered by hydrocarbon fuels. Here's the best post I've seen about what might be coming:

CapitalistImperialistPig said...

There really ought to be a rule against bringing a petard to a gas station.

Russell Seitz / Bright Water said...

When in the virtuous cycle of recharging end with your being presented with a five or six figure bill for a new lithium battery pack,?

And how many tonnes of CO2 will have gone into producing it ?

EliRabett said...

Four, and lower end of four at that

EliRabett said...

And a lot of times you have to replace the car first

Everett F Sargent said...

Hey look, their building a gas station over here and another one over there. Therefore, anecdotally I win. :(

Fergus Brown said...

I'm in shock. Fernando has managed to make some sense.
Two words: Green corridor.
It runs from Munich in Germany to Modena in Italy.
Within a few years it will have a charging station and a hydrogen refill station every 15km (roughly 10 miles).
The process began around 10 years ago and is ongoing.
The H2 is generated from 'waste' capacity, for example, the potential generation from hydro which is not being used because the grid doesn't need it -therefore, new infrastructure needs are limited, it's mainly the compressors and refuelling stations which are costs.
Bolzano in Italy already runs a fleet of H2 public buses and taxis in this way. AFAIK there are other European and Far-Eastern cities with similar initiatives (Uhlsan, Korea, the one in Japan...).
Even in North Yorkshire, some of our public buses are no longer powered by gasoline, but by gas (the other sort).
The change is coming ever closer. Just look around.

Brian Schmidt said...

Good comments. I reacted in the post with some updates.

Russell Seitz / Bright Water said...

Green corrridors are good, where possible, but worldwide , far more of the power will come from fossil than hydro , and at this stage of the game , storing hydrogen in a car makes lithium batteries look cheap,

But I still share Fergus technolust--forget Teslas --the sportiest successor to the mighty Duesenberg would be a hydrogen powered Hindenburg Convertible- just keep the top down, and the explosion risk will vanish into thin air.

Fergus Brown said...

Small side point: Yes, H and O mixed make a flammable combination. As do gas fumes and O. Except the H floats up and off, whereas the gas fumes hang around human eye level.
Safety is always just a matter of engineering. Once upon a time, steam train boilers exploded occasionally.
It's not som much technolust, as reasons to be cheerful. Doom is a computer game, not a historical inevitability.

Canman said...

Fregus Brown, here's something for you to read:

Fernando Leanme said...

Hydrogen is a bitch to contain. The molecule is very small, gets through seals, enbrittles metals, and it's incredibly dangerous. It's so dangerous we keep hydrogen plants set aside from other equipment by several hundred meters, and the piping has special attention.

The way the market is evolving, you will see less stations, tied to car wash, laundry, convenience stores, supermarkets, etc. oil companies don't make money in that business, entry is too easy, so most stations are franchises. What will drive volume down eventually (it is growing now) will be price, because we are running out of oil.

This issue gets tangled with a lot of disinformation. For example, some like to brag the USA will be a world oil superpower, but that's not really true. You will read USA "shales" compete below $50 per barrel, but that's not true. The highest quality zone, the Wolfcamp/Spraberry in Texas, can't fly unless prices are at the $55-65 range. The Bakken is now starting to show its age, and the Eagle Ford also seems to require much higher prices.

So the trick is to visualize increasing oil prices, decreasing battery prices - until they stop falling because demand pushes up the cost of lithium.

Many of you tend to think of this as a USA / Europe world. I would use Jamaica and Pakistan as case studies.

Howard said...

The UST regs were tightened in 2015 plus skyrocketing Bay Area commercial property values.

CapitalistImperialistPig said...

Shorter Fernando: Hydrogen cars (and tanks) might make very effective petards.

Nigel Franks said...

It's very unlikely considering the ongoing research into better batteries that Lithium supply is going to be a limiting factor.

Apparently aluminium/air is one potential technology and its hard to imagine is running out of either of its primary components.

Russell Seitz / Bright Water said...

"Hoisted by my own petard"

Brian, be thankful the Singularity is off to a such a slow start.