Elon Musk Says Cheap Gas Is Bad for the World

May 4, 2016, 6:49 PM UTC
Germany's Economy And Energy Minister Sigmar Gabriel Meets Tesla Motors Inc. Chief Executive Officer Elon Musk
Elon Musk, billionaire and chief executive officer of Tesla Motors Inc., arrives for a news conference in Berlin, Germany, on Thursday, Sept. 24, 2015. Tesla Motors Inc. chief executive officer Elon Musk said revelations that Volkswagen AG cheated on diesel emission tests is "obviously bad," but that the issue the world should really be concerned about is carbon dioxide emissions. Photographer: Krisztian Bocsi/Bloomberg via Getty Images
Photograph by Krisztian Bocsi — Bloomberg via Getty Images

Tesla CEO Elon Musk is worried that low cost oil and gasoline are “really quite bad for the world,” and “for the future.”

Musk made the remarks on Wednesday at the World Energy Innovation Forum, a conference organized by one of Tesla’s earliest investors and held inside a section of Tesla’s factory in Fremont, Calif.

The industry mogul has a full day on Wednesday. Tesla (TSLA) is expecting to announce its first quarter earnings on Wednesday afternoon, a couple hours after his onstage interview. (For what to expect from Tesla earnings, read this outlook).

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Musk’s concern over low gas prices aren’t just because they could effect sales of Tesla’s electric cars. When gas is cheaper, consumers are usually more eager to buy gas-guzzling cars and less enthusiastic about gas-efficient cars and electric cars. Musk is worried that cheap gas will delay a transformation for cars and electricity generation with lower carbon emissions, which will mean a delay in fighting global warming.

As Musk described it, low-cost gasoline and oil are “weakening the economic-forcing function to sustainable transport and clean energy in general.”

Musk emphasized in the interview that massive subsidies and lobbying by the fossil fuel industries have stacked the deck against clean energy and electric cars. The oil and gas industries are receiving $6 trillion in subsidies per year and “every gasoline car on the road has a subsidy,” he remarked.

For more on Elon Musk’s views on carbon pricing, watch:

The most effective way to address the gas car subsidy, according to Musk, would be to implement a carbon tax, which would add on taxes for emitting carbon emissions. However, considering passing a carbon tax is extremely difficult in the U.S. for political reasons, most states and the federal government are instead opting for offering subsidies for electric cars, he acknowledged.

Tesla and SolarCity (SCTY)—the solar panel installer where Musk is the Chairman and major investor—have both need a lot of entrepreneurial skill and thinking because selling solar panels and electric cars are economically “an uphill battle,” said Musk, stressing that’s because the externality of carbon pollution is “not priced correctly.”

The lack of economic mechanisms to account for the negative effects of carbon emissions “makes the problem much harder,” said Musk, explaining because “you’re competing against something that has a $6 trillion per year subsidy.” “That makes it really difficult,” he lamented.

One solution that Musk sees to this dilemma is to educate consumers and “appeal to the people,” “to revolt against this.” Musk called upon consumers to “fight the propaganda of the fossil fuel industry, which is unrelenting and enormous.”