$7 Gas Is Good for the Environment and Our Future, Keep the Strait of Hormuz Closed

A Shock to Oil, A Boost to Batteries

War has a way of clarifying economics. The latest Middle East conflict has disrupted roughly 20% of global seaborne oil trade, pushing crude prices up by 40% to 50% and jolting consumers worldwide. Brent crude hovering above $120 per barrel is not merely a market fluctuation, it is a stress test. In China and Europe, the response has been swift and rational. Drivers are pivoting toward electric vehicles, reinforcing China’s already dominant position in the global EV market.

The Road to $200 Oil

Markets are now contemplating a more severe scenario. Analysts suggest that oil could climb into the high $100s or even exceed $200 per barrel if supply remains constrained. This is not speculation detached from history. In 2008, demand destruction required oil prices near $150 per barrel. Adjusted for inflation, that threshold now sits above $200.

At such levels, U.S. gasoline prices will likely approach $7 per gallon, well above the previous record of $5.02 set in 2022. Prices would rise not because markets fail, but because they function. High prices ration demand when supply cannot expand. The mechanism is blunt, but effective.

Pain at the Pump, Profits in the Patch

American consumers are feeling the consequences quickly. Gasoline prices have risen by over $1 per gallon since the conflict began. The global nature of oil markets ensures that domestic production offers limited insulation.

Oil companies, however, are enjoying a windfall. U.S. producers could capture roughly $60 billion in additional profits if prices remain elevated. The crisis has also delivered unexpected gains to geopolitical rivals. Sanctions relief has allowed Russia and Iran to boost exports, potentially adding tens of billions of dollars to their revenues. Energy markets, like nature, abhor a vacuum. Someone always fills it.

Meanwhile, allies in Asia face harsher adjustments. Liquefied natural gas prices have roughly doubled. Governments are rationing fuel, cutting services, and in some cases confronting unrest. The economic burden is uneven, but widespread.

The EV Advantage

Against this backdrop, electric vehicles gain a structural advantage. Their appeal is not ideological, it is solid math. EVs convert more than 75% of electrical energy into motion, compared with just 12% to 30% for gasoline vehicles. This makes EVs roughly two and a half times more efficient than gas-powered vehicles.

Efficiency translates directly into cost. When fuel prices spike, the relative savings of electricity become more pronounced. Consumers respond accordingly. The shift is gradual in normal times, but accelerates during shocks. Each oil crisis quietly rewrites the economics of mobility.

Depending on where you live, some portion of your electricity is generated by burning fossil fuel and some from renewable sources like wind and solar. Even if EVs were powered 100% by electricity generated from fossil fuels (which they aren’t), EVs convert a far greater share of that energy into motion. Less energy is lost as heat, and more is used to move the car forward. The result is lower cost per mile and a smaller environmental footprint, another case where efficiency and sustainability align neatly.

War Meets Energy Infrastructure

The conflict itself has reached deep into energy systems. Military strikes have hit more than 12,000 targets, while retaliatory attacks have spread across the region. Nearly 80 strikes have affected energy infrastructure across multiple countries, from the Gulf states to Iraq.

The closure of the Strait of Hormuz is the pivotal development. This narrow passage normally carries about 20% of global seaborne oil. Its effective shutdown has transformed a geopolitical conflict into a supply shock of historic scale. Oil markets are now balancing not on sentiment, but on physical scarcity.

China’s EV Machine Accelerates

China entered this crisis with momentum. It already produces about half of the world’s plug in vehicles. The shock has only accelerated adoption. Retail sales of new energy vehicles reached about 900,000 units in March 2026, a 94% jump from February. The country now has more than 36 million EVs and plug in hybrids on the road, with full year sales projected between 15.5 million and 16.5 million units.

Consumers are responding to price signals with textbook efficiency. A Beijing taxi driver recently switched to an EV citing lower operating costs. A white-collar commuter made the same calculation for daily travel. Dealerships report brisk demand, with some selling more than 240 vehicles per day. Oil prices rise, EV sales follow. The relationship is becoming mechanical.

Subsidies and Structural Distortions

Despite these dynamics, fossil fuels retain significant policy support. The U.S. federal government provides at least $34.8 billion annually in subsidies to oil, gas, and coal production. Additional incentives could push support much higher in coming years, particularly through carbon capture and related programs.

These subsidies soften the impact of high prices on producers, while doing little to shield consumers from volatility. They also complicate the transition to cheaper, cleaner alternatives by preserving legacy cost structures. Markets signal change, policy often delays it.

Bottom Line

The current oil shock is both a disruption and a preview. It reveals how tightly the global economy remains tied to a handful of strategic chokepoints. It also shows how quickly consumers adapt when prices rise.

China’s EV surge is not an anomaly, it is a leading indicator. As oil markets tighten, the economics of electric mobility strengthen. Each spike in gasoline prices nudges the transition forward, not through policy mandates, but through simple cost comparisons.

Energy crises rarely produce winners in the short term. Over the longer term, however, they tend to reward efficiency. This time appears no different. When considering the advantages of buying an EV like much lower maintenance costs, better performance, and a smoother ride, add the massive savings from lower “fuel” costs.

What Do You Think?

At what price per gallon would you seriously consider switching to an EV?

Do you believe EVs are actually cheaper to own long term, or is that overstated?

Chris Johnston is the author of SAE’s comprehensive book on electric vehicles, "The Arrival of The Electric Car." His coverage on Torque News focuses on electric vehicles. Chris has decades of product management experience in telematics, mobile computing, and wireless communications. Chris has a B.S. in electrical engineering from Purdue University and an MBA. He lives in Seattle. When not working, Chris enjoys restoring classic wooden boats, open water swimming, cycling and flying (as a private pilot). You can connect with Chris on LinkedIn and follow his work on X at ChrisJohnstonEV.

Photo credit: Provided by author, ChargePoint media kit