Sharp surge in energy prices threatens economic recovery and is already slowing growth

Published

4 years ago

October 12, 2021

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Woman pumps gas outside of Wawa storefront

Saul loeb

Energy prices are surging, and the economy is already feeling the pinch of higher fuel costs though it is far from stalling out.

There is an unusual coincidence of much higher oil, natural gas and coal prices, combined with other rising commodities and supply chain disruptions. That perfect storm of shortages and higher prices begs the question of whether the economy could go into a serious tailspin or even a recession.

Economists say, for now, the jump in prices is not the type of oil shock that will turn U.S. growth negative, but there will be economic consequences of higher energy costs, particularly in places like Europe where natural gas prices have skyrocketed.

“Periods of trending oil prices tend not to be a problem,” JPMorgan chief economist Bruce Kasman said. “The periods of spiking oil prices tend to be what gets you into trouble. They tend to be largely supply driven, and they tend to have disruptive elements that are more broad in terms of their potential drags on growth.”

“We do have a rise in energy that will be a drag on fourth quarter growth,” he added. “It’s not at a point where we’re warning about recession, but it’s at the point where you have to worry about it hurting growth in a material way.”

American consumers have already been paying up for gasoline, and heating and electricity costs could rise more this winter. Oil prices are up more than 65% this year so far, while natural gas prices have jumped more than 112% since January.

“We’re looking at GDP growth in the 4% to 6% range … We would have to see massive doubling and tripling of oil prices for it to have such a bad effect that we go … to negative growth,” said Anwiti Bahuguna, head of multi-asset strategy at Columbia Threadneedle.

Since last October, gasoline prices have risen about $1.10 per gallon, and are now at $3.27 per gallon of unleaded, according to AAA. Oil prices were depressed and even turned negative when the pandemic shut down the economy in 2020. Now, forecasts for $100 oil are getting more common, as West Texas Intermediate oil futures trade above $80 per barrel for the first time since 2014.

“What’s different about this is normally it’s oil that leads an energy crisis, but in this case it’s the tail that’s being wagged by natural gas, coal and renewables,” said Daniel Yergin, vice chairman of IHS Markit. “Oil is filling in to make up for the fact that [liquified natural gas] is maxed out and wind in Europe has been a lot lower than normal.”

Trouble brewing in energy markets

Yergin said oil will likely remain under pressure, and within several months about 600,000 to 800,000 barrels a day could be used as a substitute for natural gas in Europe and Asia, where supplies are short. Oil can be substituted for electricity generation and in some manufacturing.

Citigroup forecasts a winter price shock that could see natural gas prices in Europe average over $30 per one million British thermal unit in the fourth quarter and over $32 in Asia. But Citi energy analysts also say if there is a very cold winter that could spike as high as $100 mmBtus, the equivalent of about a $580 barrel of oil. By comparison, U.S. natural gas futures are currently trading at $5.25 per mmBtu.

Coal prices have also been rising and supplies are short, creating a power supply crunch in China. The country burns coal to generate electricity, but the inventory at its power plants faced a 10-year low in August. That has also increased the demand for natural gas.

“While China unambiguously needs as much coal as it can get its hands on to avert a [fourth-quarter] slowdown due to the tyranny of rolling power shortages, geopolitical tensions with Australia have waylaid the most convenient source of high-calorific coal from Down Under,” Vishnu Varathan, head of economics and strategy for Asia and Oceania treasury department at Mizuho, said in a recent note.

Economists say the rise in energy prices would have to be sharper and much more prolonged to cause a recession.

Bernstein energy analysts looked at past periods where prices rose sharply, and found that recessions followed periods where energy costs were at 7% of global GDP, as they reached in October.

They note the probability of recession rises when the energy costs stay above that level for a period, greater than a year.

“While the recent spike in energy costs may prove transient, a protracted period of energy costs [greater than a year] or further rise in oil to over US$100/bbl could trigger a slowdown in global economic growth as disposable income gets squeezed,” Bernstein analysts wrote.

Even though the share of energy costs is the highest in nearly a decade, on an annual basis it is still 5.2% of GDP so far in 2021, and that is not yet a dangerous level, they added.

“Annual energy costs as a percentage of GDP are above the 30-year average of 4.4%, but below that of 1979 or 2008 when annual energy costs reached over 7% of GDP,” the Bernstein analysts wrote. “If energy prices rises prove to be transient, then the risk of an energy induced recession remains low.”

U.S. as a producer

Changes in the U.S. energy industry over the past two decades have provided some insulation from some of the current global energy crisis.

Mark Zandi, chief economist at Moody’s Analytics, said the hit from an energy price surge would not be all negative, since the U.S. is now a large energy producer. The U.S. produces about 11.3 million barrels a day, and exports oil and refined products.

Even with its huge production, the U.S. remains an importer of crude, bringing in an average 3.8 million barrels a day over four weeks, according to the latest Energy Information Administration weekly data.

The U.S. is providing natural gas to Europe and Asia, in the form of LNG exports, but U.S. gas prices are tied more to the domestic market and have been elevated because U.S. supplies remain lower than normal for this time of year.

Zandi said the dominance of the U.S. energy industry also has a positive impact on energy-producing parts of the economy as prices rise.

“That doesn’t mean that higher energy prices under certain scenarios wouldn’t cause a recession,” he said. “It’s just much less likely, and it would take much higher prices than it has in the past.”

Zandi said every penny increase in the cost of a gallon of gas costs U.S. consumers $1 billion. When it rises $1, as it has in the last year, that’s about $100 billion.

Another $1 jump would be harmful.

“That’s $100 billion, just a half percent of GDP. It would do damage. It would ding the economy, but I don’t think it would derail it,” he said. “If it went to $5.25, that’s $200 billion. That’s a percent of GDP. If energy prices are rising like that it’s likely other prices are rising.”

The immediate impact of higher energy costs is higher inflation, which creates a drag on consumer spending.

Kasman said the increase in energy prices, as of last week, would add about 2.5% to the consumer price index in the fourth quarter, if prices remain at that level. That could translate to a drag of a half percentage point or more on GDP, he noted.

“That is not small, but it’s not a recession,” he said. Kasman said he expects a pretty strong global economy next year, but the higher energy costs do raise concerns there could be an even big enough drag on purchasing power and that could chip away at growth.

Kasman said the impacts gets worse, the higher prices go. JPMorgan economists ran an analysis where they projected another 50% jump in energy prices.

“In this scenario, in which crude oil prices move quickly above US$100/bbl, the shock to US incomes is very large — as CPI inflation is pushed up by 10%-pts annualized — nearly twice the impact we estimate for the Euro area,” they said in a note. “While this scenario does not appear likely, it is important to recognize the threat posed by the combination of supply shocks now buffeting the global economy.”

JPMorgan forecasts fourth-quarter gross domestic product growth of 3.5%, and now expects the third quarter grew at a 4% pace, down from an earlier forecast of 8%. The firm expects average growth of 3.5% next year. They also forecast CPI gains to average more than 4% during the second half of the year.

CNBC’s Michael Bloom and Saheli Roy Choudhury contributed to this report.

Environment

Yes, an EV really CAN power your home – if it’s one of these (*)

Published

9 hours ago

September 6, 2025

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Yes, an EV really CAN power your home – if it's one of these (*)

Can an EV really help power your home when the power goes out? It’s one of the biggest FAQs people have about electric cars — but the answer can be a bit confusing. It’s either a yes, with a but – or a no, with an unless. To find out which EVs can offer vehicle-to-home (V2H) tech to keep the lights on or even lower your energy bills, keep on reading.

Modern EVs have big, efficient batteries capable of storing enough energy to power home for days. That can mean backup power during a storm or the ability to use stored energy during expensive peak hours and recharge again when kilowatts are cheap.

That’s all true – but only in theory. Because, while your EV might have a big battery, that doesn’t mean it has the special hardware and software that allow electricity to safely flow back out of the car baked in. Car companies call this vehicle-to-home (V2H) or bi-directional charging, and only a handful of models currently support it. That’s that, “yes, with a but” asterisk.

Yes, an EV can power your home, but it has to be one of these.

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Ford F-150 Lightning

Ford-Lightning-V2H — F-150 Lightning powers home; via Ford.

Ford made early headlines using its F-150 Lightning as a life-saving generator during winter ice storms and hurricanes, so it should come as no surprise that it’s included in this list. The best-selling electric truck in America can send up to 9.6 kW of power from its onboard batteries back to the house. More than enough to keep the lights on and the refrigerator running during an outage.

To make it work, you’ll need to install the Charge Station Pro (formerly called Intelligent Backup Power) home charger, the Home Integration System (HIS), which includes an inverter, a transfer switch, and a small battery to switch the system on, as well Ford’s Charge Station Pro 80A bi-directional charger (which comes free with the Extended Range F-150 Lightning, but costs about $1,300 otherwise).

All-in, you’re looking at about $5,000 in hardware, plus installation, to make it work.

Kia EV9

With up to 300 miles of range and ultra-fast charging, the seven-passenger electric SUV from Kia has been a hot seller. And back in March, the Kia EV9 unlocked yet another new feature: vehicle-to-home charging.

When paired with the Quasar 2 bidirectional charger from Wallbox (and the associated Power Recovery Unit, or PRU), a fully-charged Kia EV9 can power a standard suburban home for three days. Longer, still, if you’re keeping the energy use low. The Wallbox Quasar 2 isn’t cheap, though – pricing starts at $6,440 (again, plus installation). For that price, you the PRU plus a wall-mounted 12 kW L2 charger with 12.8 kW of with discharge power on a split-phase system.

Pretty much all the GM EVs

new-Chevy-Bolt-EV — Chevy Silverado, Equinox, and Blazer EVs at Tesla Supercharger; GM.

With the exception of the Chevy Brightdrop, GMC Hummer EV, and the hand-built, ultra-luxe Cadillac CELESTIQ, every Ultium-based GM EV can send battery power back to your home through GM Energy’s Ultium Home System – arguably the most fully integrated EV + battery backup + solar option out there outside of Tesla.

GM Energy says its new 19.2 kW Powershift Charger delivers around 6-7% more juice than a typical 11.5 kW L2 charger, delivering up to 51 miles of range per charge hour. Bi-directional charging requires the Powershift Charger to be paired up with a compatible GM EV and the GM Energy V2H Enablement Kit. The full system retails for $12,699, plus installation, and can be financed through GM Financial.

NOTE: some 2024 models might require a software update to enable V2H functionality, which can be done either at the dealer or through an OTA update.

Tesla Cybertruck

Tesla Cybertruck owners may have zero taste, but they have two options when it comes to powering their homes with their trucks. If they already have a Tesla Powerwall, they don’t need anything else. If they don’t, they’ll need to install a Universal Wall Connector charger, a Powershare Gateway, and a Tesla Backup Switch.

That second option will run about $3,500, plus installation.

That rounds off the list of vehicles that ship with V2H software baked in, so if you’re wondering whether or not your EV can be used to power your home, now you know the answer is yes, as long as it’s one of the ones listed above.

But you might remember that I answered the initial question by saying it was either a yes, with a but – or a no, with an unless. So if you want to use your car’s battery as a backup, but don’t have one of the EVs liksted above, that doesn’t mean you’re completely out of luck.

No, with an unless

[embedded content]

Fred Lambert explains Sigenergy V2X system.

As some of the earliest and most enthusiastic EV adopters, Tesla fans have also been among the loudest advocates for using the energy stored their cars’ batteries to back up their homes — or even the grid itself. Unfortunately for them, the slow-selling Cybertruck is the only Tesla vehicle that officially supports bi-directional charging. If you’re one of the many Model 3 and Y owners frustrated by those delays, there’s good news: those vehicles are now capable of V2H charging thanks to an “impressive” Powerwall competitor, Sigenergy.

The good news doesn’t stop there, however. The Sigenergy V2X also works with both the popular Kia EV6 and Electrek‘s 2024 EV of the Year, the Volvo EX30 over the DIN70121 protocol, and several VW/Audi/Porsche and Mercedes-Benz EVs over the ISO15118-2 protocol.

Our own Editor-in-Chief, Fred Lambert, recently went on a Sigenergy deep dive with Sylvain Juteau, President of Roulez Electrique, and came away deeply impressed with the system. I’ve included the video, above, and you can read more about the system itself at this link.

And, of course, I look forward to learning about any V2H models or more universal battery backup systems from you, the smartest readers in the blogosphere, in the comments.

Original content from Electrek.

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Environment

Tesla changes meaning of ‘Full Self-Driving’, gives up on promise of autonomy

Published

13 hours ago

September 5, 2025

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Tesla changes meaning of 'Full Self-Driving', gives up on promise of autonomy

Tesla has changed the meaning of “Full Self-Driving”, also known as “FSD”, to give up on its original promise of delivering unsupervised autonomy.

Since 2016, Tesla has claimed that all its vehicles in production would be capable of achieving unsupervised self-driving capability.

CEO Elon Musk has claimed that it would happen by the end of every year since 2018.

Tesla has even sold a software package, known as “Full Self-Driving Capability” (FSD), for up to $15,000 to customers, promising that the advanced driver-assist system would become fully autonomous through over-the-air software updates.

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Almost a decade later, the promise has yet to be fulfilled, and Tesla has already confirmed that all vehicles produced between 2016 and 2023 don’t have the proper hardware to deliver unsupervised self-driving as promised.

Musk has been discussing the upgrade of the computers in these vehicles to appease owners, but there’s no concrete plan to implement it.

While there’s no doubt that Tesla has promised unsupervised self-driving capabilities to FSD buyers between 2016 and 2023, the automaker has since updated its language and now only sells “Full Self-Driving (Supervised)” to customers:

The fine print mentions that it doesn’t make the vehicle “autonomous” and doesn’t promise it as a feature.

In other words, people buying FSD today are not really buying the capability of unsupervised self-driving as prior buyers did.

Furthermore, Tesla’s board has just submitted a new, unprecedented CEO compensation package for shareholders’ approval, which could give Musk up to $1 trillion in stock options pending the achievement of certain milestones.

One of these milestones is Tesla having “10 Million Active FSD Subscriptions.”

At first glance, this would be hopeful for FSD buyers since part of Musk’s compensation would be dependent on delivering on the FSD promises.

However, Tesla has changed the definition of FSD in the compensation package with an extremely vague one”

“FSD” means an advanced driving system, regardless of the marketing name used, that is capable of performing transportation tasks that provide autonomous or similar functionality under specified driving conditions.

Tesla now considers FSD only an “advanced driving system” that should be “capable of performing transportation tasks that prove autonomous or similar functionality”.

The current version of FSD, which requires constant supervising by the driver, could easily fit that description.

Therefore, FSD now doesn’t come with the inital promise of Tesla owners being able to go to sleep in their vehicles and wake up at their destination – a promise that Musk has used to sell Tesla vehicles for years.

Electrek’s Take

The way Tesla discusses autonomy with customers and investors versus how it presents it in its court filings and legally binding documents is strikingly different.

It should be worrying to anyone with an interest in this.

With this very vague description in the new CEO compensation package, Tesla could literally lower the price of FSD and even remove base Autopilot to push customers toward FSD and give Musk hundreds of billions of dollars in shares in the process.

There’s precedent for Tesla decreasing pricing on FSD. Initially, Musk said that Tesla would gradually increase the price of the FSD package as the features improved and approached unsupervised autonomy.

That was true for a while, but then Tesla started slashing FSD prices, which are now down $7,000 from their high in 2023:

The trend is quite apparent and coincidentally began when Tesla’s sales started to decline.

FSD is now a simple ADAS system without any promise of unsupervised self-driving. This might quite honestly be one of the biggest cases of false advertising or bait-and-switch ever.

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GM’s promised affordable EVs hit another hurdle, but there’s more to the story

Published

14 hours ago

September 5, 2025

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GM's promised affordable EVs hit another hurdle, but there's more to the story

The new Chevy Bolt EV is set to enter production later this year, with one fewer shift, following GM’s reduction in production plans at several US plants. Apart from the Bolt, GM promised a new family of affordable EVs. Are those, too, now at risk?

GM says more affordable EVs are coming, but when?

GM remained the number two EV maker in the US after back-to-back record sales months in July and August. However, with the $7,500 federal tax credit set to expire at the end of the month, the company expects a slowdown.

On Thursday, GM sent a note to employees at its Spring Hill plant in Tennessee, outlining plans to reduce output of two Cadillac electric SUVs, the Lyriq and Vistiq.

A source close to the matter confirmed the news to Reuters, saying the production halt will begin in December. GM will significantly reduce output during the first five months of 2026, according to the source.

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GM is also delaying the second shift at its Fairfax Assembly Plant in Kansas City, where the new Chevy Bolt is slated to enter production later this year. The Bolt will be the first of a new series of affordable EVs that GM intends to build in Kansas.

However, those too, may now be in jeopardy. According to local news outlets, GM Korea Technical Research Center (GMTCK), a spin-off of GM’s Korean subsidiary, was recently cut out of a secret small EV project it was developing.

GMTCK president Brian McMurray reportedly announced internally last month during a trip to the US that the project was cancelled and only 30% to 40% complete.

A GM Korea spokesperson clarified that “the EV project being led by GMTCK was a global undertaking, not undertaken solely by GM Korea. The spokesperson added, “The project itself has not been canceled; the role of the Korean team has simply changed.”

The new electric car, dubbed “Fun Family,” was scheduled to launch under the Chevy and Buick brands, using a single platform. Production was expected to begin in 2027 with deliveries starting in 2028.

Chevy-Bolt-EV — 2022 Chevy Bolt EUV (Source: GM)

GM Korea exports over 90% of the vehicles it makes to the US, but with the new auto tariffs, the subsidiary is expected to play a drastically smaller role, if any at all. The news is fueling the ongoing rumors that GM could withdraw from Korea altogether.

In addition to the tariffs, South Korea’s recently passed “Yellow Envelope Law” could make it even more difficult for GM with new labor laws.

Chevy-Equinox-EV-discounts — Chevy Equinox EV LT (Source: GM)

Will this impact the affordable EVs GM is promising to launch in the US? They are scheduled to be built in Kansas, but with the R&D Center, GM’s second largest globally, following the US, claiming to be excluded from a major global EV project, it can’t be a good sign.

In the meantime, GM already has one of the most affordable electric vehicles in the US, the Chevy Equinox EV. Starting at under $35,000, the company calls it “America’s most affordable” EV with over 315 miles of range.

With the $7,500 federal tax credit still available, GM is promoting Chevy Equinox EV leases for under $250 a month. Nowadays, it’s hard to find any vehicle for under that.

Source: Newsworks Korea

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