You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
Carbon removal would seem to have a pretty clear definition. It’s the reverse of carbon emissions. It means taking carbon out of the atmosphere and putting it somewhere else — underground, into products, into the ocean — where it won’t warm the planet. But a new kind of carbon removal project shows how this formula can conceal consequential differences between approaches.
A few months ago, Puro.earth, a carbon removal registry, certified a small ethanol refinery in North Dakota to sell carbon removal credits — the first ethanol plant to earn this privilege. Red Trail Energy, which owns the facility, captures the CO2 released from the plant when corn is fermented into ethanol, and injects it into a porous section of rock more than 6,000 feet underground. Since Red Trail started doing this in June of 2022, it’s prevented some 300,000 metric tons of CO2 from entering the atmosphere, according to data published by the North Dakota Department of Mineral Resources.
There are two ways to look at what’s happening here.
If you just follow the carbon, it started in the atmosphere and ended up underground. In between, the corn sucked up carbon through photosynthesis; when it was processed into ethanol, about a third of that carbon went into the fuel, a third was left behind as dried grain, and the remainder was captured as it wafted out of the fermentation tank and stashed underground. “That is, in a broad sense, how that looks like carbon removal,” Daniel Sanchez, an assistant professor at the University of California, Berkeley who studies biomass carbon removal, told me.
But if you zoom out, the picture changes. For the carbon to get from the atmosphere to the ground, a few other things had to happen. The corn had to be grown, harvested, and transported in trucks to the plant. It had to be put through a mill, cooked, and then liquified using heat from a natural gas boiler. And this was all in service, first and foremost, of producing ethanol to be burned, ultimately, in a car engine. If you account for the CO2 emitted during these other steps, the process as a whole is putting more into the atmosphere than it’s taking out.
So, is Red Trail Energy really doing carbon removal?
Puro.earth takes the first view — the registry’s rules essentially draw a box around the carbon capture and storage, or CCS, part of the process. Red Trail has to count the emissions from the energy it took to capture and liquify and inject the carbon, but not from anything else that happened before that. So far, Puro has issued just over 157,000 carbon removal credits for Red Trail to sell.
This is, essentially, industry consensus. Other carbon market registries including Gold Standard, Verra, and Isometric more or less take the same approach for any projects involving biomass, though they haven’t certified any ethanol projects yet. (Isometric’s current rules disqualify ethanol plants because they only allow projects that use waste biomass.)
But the nonprofit CarbonPlan, a watchdog for the carbon removal industry, argues that it’s a mistake to call this carbon removal. In a blog post published in December, program lead Freya Chay wrote that because the carbon storage is “contingent upon the continued production of ethanol,” it’s wrong to separate the two processes. The project reduces the facility’s overall emissions, Chay argued, but it’s not “carbon removal.”
This debate may sound semantic, and to some extent, it is. As long as an action results in less pollution warming the planet, does it matter whether we label it “carbon removal” or “emission reduction”?
The point of carbon credits is that they are paying for an intervention that wouldn’t have happened otherwise. “You have to look at, what part of the project is being built because they receive carbon removal credits?” Marianne Tikkanen, the co-founder and head of standard at Puro told me. “In this case, it was the capture part.” Previously, the emissions from the fermentation tank were considered to be zero, since the carbon started in the atmosphere and ended up back in the atmosphere. If you just look at the change that the sale of credits supported, those emissions are now negative.
But the logic of carbon credits may not be totally aligned with the point of carbon removal. Scientists generally see three roles for technologies that remove carbon from the atmosphere. The first is to reduce net emissions in the near term — Red Trail’s project checks that box. In the medium term, carbon removal can counteract any remaining emissions that we don’t know how to eliminate. That’s how we’ll “achieve net-zero” and stop the planet from warming.
But those who say these labels really matter are thinking of the third role. In the distant future, if we achieve net-zero emissions, but global average temperatures have reached dangerous heights, doing additional carbon removal — and lowering the total concentration of CO2 in the atmosphere — will be our only hope of cooling the planet. If this is the long term goal, there is a “clear conceptual problem” with calling a holistic process that emits more than it removes “carbon removal,” Chay told me.
“I think the point of definitions is to help us navigate the world,” she said. “It will be kind of a miracle if we get there, but that is the lighthouse.”
Red Trail may have been the first ethanol company to get certified to sell carbon removal credits, but others are looking to follow in its footsteps. Chay’s blog post, written in December, was responding to news of another project: Summit Carbon Solutions, a company trying to build a major pipeline through the midwest that will transport CO2 captured from ethanol refineries and deliver it to an underground well in North Dakota, announced a deal to pre-sell $30 million worth of carbon removal credits from the project; it plans to certify the credits through Gold Standard. In May, Summit announced it planned to sell more than 160 million tons of carbon removal credits over the next decade.
Decarbonization experts often refer to the emissions from ethanol plants as low-hanging fruit. Out of all the polluting industries that we could be capturing carbon from, ethanol is one of the easiest. The CO2 released when corn sugar is fermented is nearly 100% pure, whereas the CO2 that comes from fossil fuel combustion is filled with all kinds of chemicals that need to be scrubbed out first.
Even if it’s relatively easy, though, it’s not free, and the ethanol industry has historically ignored the opportunity. But in the past few years, federal tax credits and carbon markets have made the idea more attractive.
Red Trail’s CCS project has been a long time in the making. The company began looking into CCS in 2016, partnering with the Energy and Environmental Research Center, the North Dakota Industrial Commission Renewable Energy Council, and the U.S. Department of Energy on a five-year feasibility study. Jodi Johnson, Red Trail’s CEO, answered questions about the project by email. “Building a first-of-its-kind CCS project involved significant financial, technical, and regulatory risks,” she told me. “The technology, while promising, required substantial upfront investment and a commitment to navigating uncharted regulatory frameworks.”
The primary motivation for the project was the company’s “commitment to environmental stewardship and sustainability,” Johnson said, but low-carbon fuel markets in California and Oregon were also a “strategic incentive.” Ethanol companies that sell into those states earn carbon credits based on how much cleaner their fuel is than gasoline. They can sell those credits to dirtier-fuel makers who need to comply with state laws. The carbon capture project would enable Red Trail to earn more credits — a revenue stream that at first, looked good enough to justify the cost. A 2017 economic assessment of the project found that it “may be economically viable,” depending on the specific requirements in the two states.
But today, two years after Red Trail began capturing carbon, the company’s application to participate in California’s low-carbon fuel market is still pending. Though the company does sell some ethanol into the Oregon market, it decided to try and sell carbon removal credits through Puro to support “broader decarbonization and sequestration efforts while awaiting regulatory approvals,” Johnson said. Red Trail had already built its carbon capture system prior to working with Puro, but it may not have operated the equipment unless it had an incentive to do so.
Puro didn’t just take Red Trail’s word for it. The project underwent a “financial additionality test” including an evaluation of other incentives for Red Trail to sequester carbon. For example, the company can earn up to $50 in tax credits for each ton of CO2 it puts underground. (The Inflation Reduction Act increased this subsidy to $85 per ton, but Red Trail is not eligible for the higher amount because it started building the project before the law went into effect.) In theory, this tax credit alone could be enough to finance the project. A recent report from the Energy Futures Initiative concluded that a first-of-a-kind CCS project at an ethanol plant should cost between $36 and $41 per ton of CO2 captured and stored.
Johnson told me Red Trail does not pay income tax at the corporate level, however — it is taxed as a partnership. That means individual investors can take advantage of the credit, but it’s not a big enough benefit to secure project finance. The project “requires significant capital expenditure, operating expense, regulatory, and long-term monitoring for compliance,” she said. “Access to the carbon market was the needed incentive to secure the investment and the continuous project operation.”
Ultimately, after an independent audit of Red Trail’s claims, Puro concluded that the company did, in fact, need to sell carbon removal credits to justify operating the CCS project. (Red Trail is currently also earning carbon credits for fuel sold in Oregon, but Puro is accounting for these and deducting credits from its registry accordingly.)
All this helps make the case that it’s reasonable to support projects like Red Trail’s through the sale of carbon credits. But it doesn’t explain why we should call it carbon removal.
When I put the question to Tikkanen, she said that the project interrupts the “short cycle” of carbon: The CO2 is captured during photosynthesis, it’s transferred into food or fuel, and then it’s released back into the air in a continuous loop — all in a matter of months. Red Trail is turning that loop into a one-way street from the atmosphere to the ground, taking more and more carbon out of the air over time. That’s different from capturing carbon at a fossil fuel plant, where the carbon in question had previously been trapped underground for millennia.
Robert Hoglund, a carbon removal advisor who co-founded the database CDR.fyi, had a similar explanation. He told me that it didn’t make sense to categorize this project as “reducing emissions” from the plant because the fossil fuel-burning trucks that deliver the corn and the natural gas boilers cooking it are still releasing the same amount of carbon into the atmosphere. “If we say only processes that, if they're scaled up, lead to lower emissions in the atmosphere are carbon removal, that's looking at it from a system perspective,” he said. “I can understand where they come from, but I think it does add some confusion.”
Red Trail Energy and Summit Carbon Solutions defended the label, noting that this is the way carbon market registries have decided to treat biomass-based carbon sequestration projects. “The fact that emissions remain from the lifecycle of the corn itself is not the focus of the removal activity,” Johnson told me. “The biogenic CO2 is clearly removed from the atmosphere permanently.”
Sanchez, the Berkeley professor, argued that Puro’s rules are adequate because there’s a path for ethanol plants to eventually achieve net-negative emissions. They will have to capture emissions from the boiler, in addition to the fermentation process, and make a few other tweaks, like using renewable natural gas, according to a recent peer-reviewed study Sanchez authored. “That's not what's happening here,” he told me, “but I view that as indicative that this is part of the basket of technologies that we use to reach net-zero and to suck CO2 out of the air.”
(Red Trail is working on reducing its emissions even more, Johnson told me. The company is finishing engineering on a new combined heat and power system that will improve efficiency at the plant.)
In addition to teaching at Berkeley, Sanchez is a principal scientist for the firm Carbon Direct, which helps corporate buyers find “high quality” carbon removal credits. He added that he felt the project was “worthy" of the dollars companies are designating for carbon removal because of the risk it involved, and the fact that it would blaze a trail for others to follow. Ethanol CCS projects will help build up carbon storage infrastructure and expertise, enabling other carbon removal projects in the future.
Though there is seeming consensus among carbon market participants that this is carbon removal, scientists outside the industry are more skeptical. Katherine Maher, an Earth systems scientist who studies the carbon cycle at Stanford University, said she understood the argument for calling ethanol with CCS carbon removal, but she also couldn’t ignore the fact that capturing the carbon requires energy to grow the corn, transport it, and so on. “You really need to be conscious about, what are the other emissions in the project, and are those being accounted for in the calculation of the CO2 removed?”
Carbon180, a nonprofit that advocates for carbon removal policy, shares that perspective. “When it comes to ethanol with CCS, we want to see the actual net negativity,” Sifang Chen, the group’s managing science and innovation advisor, told me.
In the U.S. Department of Energy’s Road to Removals report, a 221-page document that highlights all of the opportunities for carbon removal in the United States, the agency specifically chose not to analyze ethanol with CCS “due largely to its inability to achieve a negative [carbon intensity] without substantial retrofitting of existing corn-ethanol facilities.”
It’s possible to say that both views are correct. Each follows a clear logic — one more rooted in creating practical rules for a market in order to drive innovation, the other in the uncompromising math of atmospheric science.
At times throughout writing this, I wondered if I was making something out of nothing. But the debate has significance beyond ethanol. Sanchez pointed out to me that you could ask the same question about any so-called carbon removal process that’s tied to an existing industry. Take enhanced rock weathering, for example, which involves crushing up special kinds of rocks that are especially good at absorbing carbon from the air. A lot of the companies trying to do this get their rocks from mining waste, but they don’t include all the emissions from mining in their carbon removal calculation.
Similarly, Summit Carbon Solutions noted that CarbonPlan supports claims of carbon removal by Charm Industrial, a company that takes the biomass left behind in corn fields, turns it into oil, and sequesters the oil underground. In that case, the company is not counting emissions from corn production or the downstream uses of corn.
Chay admitted that she didn’t have a great answer for why she drew the boundaries differently for one versus the other. “We don’t claim to have all the answers, and this back-and-forth illustrates just how much ambiguity there is and why it’s important to work through these issues,” she told me in an email. But she suggested that one point of comparison is to look at how dependent the carbon removal activity is on “the ongoing operation of a net emitting industry, and how one thinks about the role of that emitting industry in a net-zero world.” There is no apparent version of the future where we no longer have mining as an industry, or no longer grow corn for food. But there is a path to eliminating the use of ethanol by electrifying transportation.
It’s worth mentioning that this niche debate about carbon removal is taking place within a much larger and longer controversy about whether ethanol belongs in a low-carbon future at all.
Red Trail told me the company sees the adoption of electric vehicles as an opportunity to diversify into making fuels for aviation and heavy-duty transportation, which are more difficult to electrify. But some environmental groups, like the World Resources Institute, argue that a more sustainable approach would be to develop synthetic fuels from captured carbon and hydrogen. I should note that experts from both sides of this debate told me that carbon credit sales should not justify keeping an ethanol plant open or building a new one if the economics of the fuel don’t work on their own.
In Chay’s blog post, she presented real stakes for this rhetorical debate. If we call net-emitting processes carbon removal, we could develop an inflated sense of how much progress we’ve made toward our overall capacity to remove carbon from the atmosphere, which in turn could warp perceptions of how quickly we need to reduce emissions.
Peter Minor, the former director of science and innovation at Carbon180 who is starting a company focused on measurement and verification, raised the same concern. “When the definition of what it means to remove a ton of CO2 from the air is subjective, what happens is you get a bunch of projects that might have quite different climate impacts,” he told me. “And you may or may not realize it until after the fact.”
There’s also a risk of diverting funding that could go toward scaling up more challenging, more expensive, but truly net-negative solutions such as direct air capture. This risk is compounded by the growing pressure on carbon market players like Puro and Carbon Direct to identify new, more affordable carbon removal projects. Over the past several years, influential groups like the Science Based Targets initiative and corporate sustainability thought leaders like Stripe and Microsoft have decided that old-school carbon credits — the cheaper so-called “offsets” that represent emissions reductions — are not good enough. Now companies are expected to buy carbon removal credits to fulfill their climate promises to customers, lest they be accused of greenwashing.
As a result, the industry has backed itself into a corner, Minor told me. “We have come out as a society and said, the only thing that is worth it, the only thing that is allowed to be used is carbon removal,” he said. “So if that's the only thing with economics behind it, then yeah, like, magic! Everything is now all of a sudden carbon removal! Who would have predicted that this could have happened?”
The success of carbon removal depends, ultimately, on integrity — the industry’s favorite word these days. From the companies trying to remove carbon, to the carbon credit registries validating those efforts, to the nonprofits, brokers, and buyers that want to see the market scale, everyone is talking about developing transparent and trustworthy processes for measuring how much carbon is removed from the atmosphere by a given intervention. But how good is good measurement if experts don’t agree on what should be measured?
“There hasn't been a way to standardize the climate impacts that are being promised,” said Minor. “And so I think unless we solve that problem, I just don't see how we're going to build the trust we need, to create the economics that we need and justify an industry that can’t really exist outside of the millions or billions of tons scale.”
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Businesses were already bracing for a crash. Then came another 50% tariff on Chinese goods.
When I wrote Heatmap’s guide to driving less last year, I didn’t anticipate that a good motivation for doing so would be that every car in America was about to get a lot more expensive.
Then again, no one saw the breadth and depth of the Trump administration’s tariffs coming. “We would characterize this slate of tariffs as ‘worse than the worst case scenario,’” one group of veteran securities analysts wrote in a note to investors last week, a sentiment echoed across Wall Street and reflected in four days of stock market turmoil so far.
But if the economic downturn has renewed your interest in purchasing a bike or e-bike, you’ll want to act fast — and it may already be too late. Because Trump’s “Liberation Day” tariffs stack on top of his other tariffs and duties, the U.S. bicycle trade association PeopleForBikes calculated that beginning on April 9, the day the newest tariffs come into effect, the duty on e-bikes from China would be 79%, up from nothing at all under President Biden. The tariff on most non-electric bikes from China, meanwhile, would spike to 90%, up from 11% on January 1 of this year. Then on Tuesday, the White House announced that it would add another 50% tariff on China on top of that whole tariff stack, starting Wednesday, in retaliation for Beijing’s counter-tariffs.
Prior to the latest announcement, Jay Townley, a founding partner of the cycling industry consulting firm Human Powered Solutions, had told me that if the Trump administration actually followed through on a retaliatory 50% tariff on top of those duties, then “we’re out of business because nobody can afford to bring in a bicycle product at 100% or more in tariffs.”
It’s difficult to overstate how existential the tariffs are for the bicycle industry. Imports account for 97% of the bikes purchased in the United States, of which 87% come from China, making it “one of the most import-dependent and China-dependent industries in the U.S.,” according to a 2021 analysis by the Coalition for a Prosperous America, which advocates for trade-protectionist policies.
Many U.S. cycling brands have grumbled for years about America’s relatively generous de minimis exemption, a policy of waiving duties on items valued at less than $800. The loophole — which is what enables shoppers to buy dirt-cheap clothes from brands like Temu, Shein, and Alibaba — has also allowed for uncertified helmets and non-compliant e-bikes and e-bike batteries to flood the U.S. market. These batteries, which are often falsely marketed as meeting international safety standards, have been responsible for deadly e-bike fires in places like New York City. “A going retail for a good lithium-ion replacement battery for an e-bike is $800 to $1,000,” Townley said. “You look online, and you’ll see batteries at $350, $400, that come direct to you from China under the de minimis exemption.”
Cyclingnews reported recently that Robert Margevicius, the executive vice president of the American bicycle giant Specialized, had filed a complaint with the Trump administration over losing “billions in collectable tariffs” through the loophole. A spokesperson for Specialized defended Margevicius’ comment by calling it an “industry-wide position that is aligned with PeopleForBikes.” (Specialized did not respond to a request for clarification from Heatmap, though a spokesperson told Cyclingnews that de minimis imports permit “unsafe products and intellectual property violation.” PeopleForBikes’ general and policy counsel Matt Moore told me in an email that “we have supported reforming the way the U.S. treats low-value de minimis imports for several years.”)
Trump indeed axed China’s de minimis exemption as part of his April 2 tariffs — a small win for the U.S. bicycle brands. But any protection afforded by duties on cheap imported bikes and e-bikes will be erased by the damage from high tariffs imposed on China and other Asian countries. Fewer than 500,000 bicycles in a 10 million-unit market are even assembled in the United States, and essentially none is entirely manufactured here. “We do not know how to make a bike,” Townley told me flatly. Though a number of major U.S. brands employ engineers to design their bikes, when it comes to home-shoring manufacturing, “all of that knowledge resides in Taiwan, China, Vietnam. It isn’t here.”
In recent years, Chinese factories had become “very proficient at shipping goods from third-party countries” in order to avoid European anti-dumping duties, as well as leftover tariffs from Trump’s first term, Rick Vosper, an industry veteran and columnist at Bicycle Retailer and Industry News, told me. “Many Chinese companies built bicycle assembly plants in Vietnam specifically so the sourcing sticker would not say ‘made in China,’” he added. Of course, those bikes and component parts are now also subject to Trump’s tariffs, which are as high as 57% for Vietnam, 60% for Cambodia, and 43% for Taiwan for most bikes. (A potential added tariff on countries that import oil from Venezuela could bump them even higher.)
The tariffs could not come at a worse time for the industry. 2019 marked one of the slowest years for the U.S. specialty retail bike business in two decades, so when COVID hit — and suddenly everyone wanted a bicycle as a way of exercising and getting around — there was “no inventory to be had, but a huge influx of customers,” Vosper told me. In response, “major players put in huge increases in their orders.”
But by 2023, the COVID-induced demand had evaporated, leaving suppliers with hundreds of millions of dollars in inventory that they couldn’t move. Even by discounting wholesale prices below their own cost to make the product and offering buy-one-get-one deals, dealers couldn’t get the bikes off their hands. “All the people who wanted to buy a bike during COVID have bought a bike and are not ready to buy another one anytime soon,” Vosper said.
Going into 2025, many retailers were still dealing with the COVID-induced bicycle glut; Mike Blok, the founder of Brooklyn Carbon Bike Company in New York City, told me he could think of three or four tristate-area shops off the top of his head that have closed in recent months because they were sitting on inventory.
Blok, however, was cautiously optimistic about his own position. While he stressed that he isn’t a fan of the tariffs, he also largely sells pre-owned bikes. On the low end of the market, the tariffs will likely raise prices no more than about $15 or $20, which might not make much of a difference to consumer behavior. But for something like a higher-end carbon fiber bike, which can run $2,700 or higher and is almost entirely produced in Taiwan, the tariffs could mean an increase of hundreds of dollars for customers. “I think what that will mean for me is that more folks will be open to the pre-owned option,” Blok said, although he also anticipates his input costs for repairs and tuning will go up.
But there’s a bigger, and perhaps even more obvious, problem for bike retailers beyond their products becoming more expensive. “What I sell is not a staple good; people don’t need a bike,” Blok reminded me. “So as folks’ discretionary income diminishes because other things become more expensive, they’ll have less to spend on discretionary items.”
Townley, the industry consultant, confirmed that many major cycling brands had already seen the writing on the wall before Trump announced his tariffs and begun to pivot to re-sale. Bicycling Magazine, a hobbyist publication, is even promoting “buying used” as one of its “tips to help you save” under Trump’s tariffs. Savvy retailers might be able to pivot and rely on their service, customer loyalty, and re-sale businesses to stay afloat during the hard days ahead; Moore of PeopleForBikes also noted that “repair services may increase” as people look to fix what they already have.
And if you don’t have a bike or e-bike but were thinking about getting one as a way to lighten your car dependency, decarbonize your life, or just because they’re cool, “there are still good values to be found,” Moore went on. “Now is a great time to avoid a likely increase in prices.” Townley anticipated that depending on inventory, we’re likely 30 to 40 days away from seeing prices go up.
In the meantime, cycling organizations are scrambling to keep their members abreast of the coming changes. “PeopleForBikes is encouraging our members to contact their elected representatives about the very real impacts these tariffs will have on their companies and our industry,” Moore told me. The National Bicycle Dealers Association, a nonprofit supporting specialty bicycle retailers, has teamed up with the D.C.-based League of American Bicyclists, a ridership organization, to explore lobbying lawmakers for the first time in decades in the hopes that some might oppose the tariffs or explore carve-outs for the industry.
But Townley, whose firm Human Powered Solutions is assisting in NBDA’s effort, shared a grim conversation he had at a recent trade show in Las Vegas, where a new board member at a cycling organization had asked him “what can we do” about Trump’s tariffs.
“I said, ‘You’re out of time,” Townley recalled. “There isn’t much that can be done. All we can do is react.”
Any household savings will barely make a dent in the added costs from Trump’s many tariffs.
Donald Trump’s tariffs — the “fentanyl” levies on Canada, China, and Mexico, the “reciprocal” tariffs on nearly every country (and some uninhabited islands), and the global 10% tariff — will almost certainly cause consumer goods on average to get more expensive. The Yale Budget Lab estimates that in combination, the tariffs Trump has announced so far in his second term will cause prices to rise 2.3%, reducing purchasing power by $3,800 per year per household.
But there’s one very important consumer good that seems due to decline in price.
Trump administration officials — including the president himself — have touted cheaper oil to suggest that the economic response to the tariffs hasn’t been all bad. On Sunday, Secretary of the Treasury Scott Bessent told NBC, “Oil prices went down almost 15% in two days, which impacts working Americans much more than the stock market does.”
Trump picked up this line on Truth Social Monday morning. “Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION,” he wrote. He then spent the day posting quotes from Fox Business commentators echoing that idea, first Maria Bartiromo (“Rates are plummeting, oil prices are plummeting, deregulation is happening. President Trump is not going to bend”) then Charles Payne (“What we’re not talking about is, oil was $76, now it’s $65. Gasoline prices are going to plummet”).
But according to Neil Dutta, head of economic research at Renaissance Macro Research, pointing to falling oil prices as a stimulus is just another example of the “4D chess” theory, under which some market participants attribute motives to Trump’s trade policy beyond his stated goal of reducing trade deficits to as near zero (or surplus!) as possible.
Instead, oil markets are primarily “responding to the recession risk that comes from the tariff and the trade war,” Dutta told me. “That is the main story.” In short, oil markets see less global trade and less global production, and therefore falling demand for oil. The effect on household consumption, he said, was a “second order effect.”
It is true that falling oil prices will help “stabilize consumption,” Dutta told me (although they could also devastate America’s own oil industry). “It helps. It’ll provide some lift to real income growth for consumers, because they’re not spending as much on gasoline.” But “to fully offset the trade war effects, you basically need to get oil down to zero.”
That’s confirmed by some simple and extremely back of the envelope math. In 2023, households on average consumed about 700 gallons of gasoline per year, based on Energy Information Administration calculations that the average gasoline price in 2023 was $3.52, while the Bureau of Labor Statistics put average household gasoline expenditures at about $2,450.
Let’s generously assume that due to the tariffs and Trump’s regulatory and diplomatic efforts, gas prices drop from the $3.26 they were at on Monday, according to AAA, to $2.60, the average price in 2019. (GasBuddy petroleum analyst Patrick De Haanwrote Monday that the tariffs combined with OPEC+ production hikes could lead gas prices “to fall below $3 per gallon.”)
Let’s also assume that this drop in gas prices does not cause people to drive more or buy less fuel-efficient vehicles. In that case, those same 700 gallons cost the average American $1,820, which would generate annual savings of $630 on average per household. If we went to the lowest price since the Russian invasion of Ukraine, about $3 per gallon, total consumption of 700 gallons would cost a household about $2,100, saving $350 per household per year.
That being said, $1,820 is a pretty low level for annual gasoline consumption. In 2021, as the economy was recovering from the Covid recession and before gas prices popped, annual gasoline expenditures only got as low as $1,948; in 2020 — when oil prices dropped to literally negative dollars per barrel and gas prices got down to $1.85 a gallon — annual expenditures were just over $1,500.
In any case, if you remember the opening paragraphs of this story, even the most generous estimated savings would go nowhere near surmounting the overall rise in prices forecast by the Yale Budget Lab. $630 is less than $3,800! (JPMorgan has forecast a more mild increase in prices of 1% to 1.5%, but agrees that prices will likely rise and purchasing power will decline.)
But maybe look at it this way: You might be able to drive a little more than you expected to, even as your costs elsewhere are going up. Just please be careful! You don’t want to get into a bad accident and have to replace your car: New car prices are expected to rise by several thousand dollars due to Trump’s tariffs.
With cars about to get more expensive, it might be time to start tinkering.
More than a decade ago, when I was a young editor at Popular Mechanics, we got a Nissan Leaf. It was a big deal. The magazine had always kept long-term test cars to give readers a full report of how they drove over weeks and months. A true test of the first true production electric vehicle from a major car company felt like a watershed moment: The future was finally beginning. They even installed a destination charger in the basement of the Hearst Corporation’s Manhattan skyscraper.
That Leaf was a bit of a lump, aesthetically and mechanically. It looked like a potato, got about 100 miles of range, and delivered only 110 horsepower or so via its electric motors. This made the O.G. Leaf a scapegoat for Top Gear-style car enthusiasts eager to slander EVs as low-testosterone automobiles of the meek, forced upon an unwilling population of drivers. Once the rise of Tesla in the 2010s had smashed that paradigm and led lots of people to see electric vehicles as sexy and powerful, the original Leaf faded from the public imagination, a relic of the earliest days of the new EV revolution.
Yet lots of those cars are still around. I see a few prowling my workplace parking garage or roaming the streets of Los Angeles. With the faded performance of their old batteries, these long-running EVs aren’t good for much but short-distance city driving. Ignore the outdated battery pack for a second, though, and what surrounds that unit is a perfectly serviceable EV.
That’s exactly what a new brand of EV restorers see. Last week, car site The Autopiancovered DIYers who are scooping up cheap old Leafs, some costing as little as $3,000, and swapping in affordable Chinese-made 62 kilowatt-hour battery units in place of the original 24 kilowatt-hour units to instantly boost the car’s range to about 250 miles. One restorer bought a new battery on the Chinese site Alibaba for $6,000 ($4,500, plus $1,500 to ship that beast across the sea).
The possibility of the (relatively) simple battery swap is a longtime EV owner’s daydream. In the earlier days of the electrification race, many manufacturers and drivers saw simple and quick battery exchange as the solution for EV road-tripping. Instead of waiting half an hour for a battery to recharge, you’d swap your depleted unit for a fully charged one and be on your way. Even Tesla tested this approach last decade before settling for good on the Supercharger network of fast-charging stations.
There are still companies experimenting with battery swaps, but this technology lost. Other EV startups and legacy car companies that followed Nissan and Tesla into making production EVs embraced the rechargeable lithium-ion battery that is meant to be refilled at a fast-charging station and is not designed to be easily removed from the vehicle. Buy an electric vehicle and you’re buying a big battery with a long warranty but no clear plan for replacement. The companies imagine their EVs as something like a smartphone: It’s far from impossible to replace the battery and give the car a new life, but most people won’t bother and will simply move on to a new car when they can’t take the limitations of their old one anymore.
I think about this impasse a lot. My 2019 Tesla Model 3 began its life with a nominal 240 miles of range. Now that the vehicle has nearly six years and 70,000 miles on it, its maximum range is down to just 200, while its functional range at highway speed is much less than that. I don’t want to sink money into another vehicle, which means living with an EV’s range that diminishes as the years go by.
But what if, one day, I replaced its battery? Even if it costs thousands of dollars to achieve, a big range boost via a new battery would make an older EV feel new again, and at a cost that’s still far less than financing a whole new car. The thought is even more compelling in the age of Trump-imposed tariffs that will raise already-expensive new vehicles to a place that’s simply out of reach for many people (though new battery units will be heavily tariffed, too).
This is no simple weekend task. Car enthusiasts have been swapping parts and modifying gas-burning vehicles since the dawn of the automotive age, but modern EVs aren’t exactly made with the garage mechanic in mind. Because so few EVs are on the road, there is a dearth of qualified mechanics and not a huge population of people with the savvy to conduct major surgery on an electric car without electrocuting themselves. A battery-replacing owner would need to acquire not only the correct pack but also potentially adapters and other equipment necessary to make the new battery play nice with the older car. Some Nissan Leaf modifiers are finding their replacement packs aren’t exactly the same size, shape or weight, The Autopian says, meaning they need things like spacers to make the battery sit in just the right place.
A new battery isn’t a fix-all either. The motors and other electrical components wear down and will need to be replaced eventually, too. A man in Norway who drove his Tesla more than a million miles has replaced at least four battery packs and 14 motors, turning his EV into a sort of car of Theseus.
Crucially, though, EVs are much simpler, mechanically, than combustion-powered cars, what with the latter’s belts and spark plugs and thousands of moving parts. The car that surrounds a depleted battery pack might be in perfectly good shape to keep on running for thousands of miles to come if the owner were to install a new unit, one that could potentially give the EV more driving range than it had when it was new.
The battery swap is still the domain of serious top-tier DIYers, and not for the mildly interested or faint of heart. But it is a sign of things to come. A market for very affordable used Teslas is booming as owners ditch their cars at any cost to distance themselves from Elon Musk. Old Leafs, Chevy Bolts and other EVs from the 2010s can be had for cheap. The generation of early vehicles that came with an unacceptably low 100 to 150 miles of range would look a lot more enticing if you imagine today’s battery packs swapped into them. The possibility of a like-new old EV will look more and more promising, especially as millions of Americans realize they can no longer afford a new car.