By The Car Coach Lauren Fix
President Joe Biden announced the US will ban Russian oil imports due to Putin’s Invasion of Ukraine. The impact of this will impact you at the pump, your ability to get vehicles and parts.
Americans will start to feel some of its effects in more than just higher gas prices.
The price of gasoline was rising before Putin began his military buildup on Ukrainian border. The increased gas prices are now the highest since the 2008 recession. Everyone is impacted by higher gas prices even if you own an electric car.
Electric vehicles are even more dependent on microchips and rare earth metals than traditional vehicles, making the industry challenges of the past two years particularly costly for EVs. These issues should eventually be resolved, but the current state of the world is not friendly to EV production, cutting profits and forcing price hikes.
This is a powder keg that you need to know about.
Let’s start with gasoline. While we are experiencing high gas prices at the gas stations across the country, Joe Biden said he is moving forward with a ban on Russian oil imports, knowing the United States produces more oil than all European countries combined. That means Russian oil will no longer be acceptable at US ports and the American people will be dealt another powerful blow. There is a 45-day wind-down period as we take delivery of the last of our purchases of oil. Russian imports make up about seven percent of all U.S. oil imports. That may not seem like a lot but big companies like BP, Shell, and Exxon had already cut ties with Russia. Crude oil is a global commodity, we can expect to see high gas prices for some time.
It’s possible that the Organization of the Petroleum Exporting Countries (OPEC) could decide to increase supply, but there has been no indication from such countries that they will produce and export more oil to replace Russia’s oil. This will cost everyone at the pump.
Russia’s invasion of Ukraine is ramping up the price of metals used in cars, from aluminum in the bodywork to palladium in catalytic converters to the high-grade nickel in electric vehicle batteries, and this means increased car prices across the board. Some auto parts suppliers are already steering clear of Russian goods, putting more pressure on carmakers already reeling from a chip shortage and higher energy prices. Aluminum and palladium both hit record highs on Monday while nickel, which is also used to make stainless steel, crossed the $100,000-a-ton level for the first time ever. Consumers are already paying for the chip shortage as it has pushed car inventories down and prices up–even before higher metals prices are added in the mix.
Batteries are one of the most expensive components in EV’s. Automakers have been hoping they will become cheaper so they can offer more affordable electric cars. The London Metal Exchange (LME) suspended trading of nickel, the key critical mineral that is needed for electric vehicle manufacturing after prices surged to record highs. The price of the commodity surged more than 100 percent because Russia mines about 10 percent of the world’s nickel supply. This will not help lower costs and it will reduce deliveries to dealers.
The crisis could worsen rising inflation and propel already record-high vehicle prices even higher.
Even Elon Musk calls for increased nuclear power, oil and gas production. He stated, “Extraordinary times demand extraordinary measures.” I agree!
The Bottom Line
So what’s the answer?
The war against fossil fuels has been going on for years. America is being held hostage by Venezuela, the Middle East, OPEC, and OPEC plus. We need to return to producing even more of our own energy for security and to lower gas prices for all Americans.
For every increase of one dollar per gallon equals $500 per driver penalty on their budgets. Americans can’t afford any of the increases as I outlined above. They can’t afford new electric car payments with increased insurance fees, which the government thinks will save us money. Do the math: It will cost more to buy a new car if you can get one.
Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news, and safety issues.
Lauren is the CEO of Automotive Aspects and the Editor-in-Chief of Car Coach Reports, a global automotive news outlet. She is an automotive contributor to national and local television news shows, including Fox News, Fox Business, CNN International, The Weather Channel, Inside Edition, Local Now News, Community Digital News, and more. Lauren also co-hosts a regular show on ABC.com with Paul Brian called “His Turn – Her Turn” and hosts regular radio segments on USA Radio – DayBreak.
Lauren is honored to be inducted into the Women’s Transportation Hall of Fame and a Board Member of the Buffalo Motorcar Museum and Juror / President for the North American Car, Utility & Truck of the Year Awards.
Check her out on Twitter and Instagram @LaurenFix.