Here's a puzzle for you: a major conflict in the Middle East disrupts global oil supplies, sending gasoline prices soaring above $4 a gallon across the United States. You might think, "Great time to buy an electric car, right?" Apparently not. According to data from Cox Automotive, U.S. EV sales are actually projected to fall by 28% in March.

So what gives? Are American drivers just stubbornly attached to the pump, or is something else going on?

Daniel Greene, Senior Director of Consumer Protection and Product Safety Policy at the National Consumers League, has some thoughts. In a conversation with MarketDash, he explained the basic economics: "The cost of fuel is the most significant contributor to the overall cost of vehicle ownership. As fuel costs generally rise, there is a shift to more fuel-efficient vehicles." He anticipates demand will eventually swing toward hybrids and EVs.

There's already a sign of that shift in the used car market, where EV sales jumped 12%. Greene called that "pretty remarkable," especially considering the loss of federal EV purchase incentives. But new EVs? They're just not selling at the same pace.

Greene has a theory: maybe customers looked at the spike at the pump and thought, "This is just a short-term blip." When you're making a big-ticket purchase like a car, a temporary price hike might not be enough to change your mind. "I would be very curious to see how the market transitions in April and May and particularly whether gasoline prices stay where they are or not," he said.

The 'Cruel Irony' of Timing

This brings Greene to his main point, which he delivers with a dose of frustration. "There is a cruel irony that in the midst of these unprecedented spikes in gasoline prices and a deepening affordability crisis, the Trump administration’s response has been to eliminate tax credits for clean vehicles and roll back fuel economy standards," he said.

In other words, just when high gas prices should be making electric cars look more attractive from a pure cost perspective, the government is pulling back the financial help that makes them easier to buy. Greene argues this policy direction could hurt energy security, raise costs, and "decimate household budgets."

He's adamant that the shift is coming regardless. "EVs are coming whether we like them or not. They’re coming. That is the future," he said, stressing the need for the U.S. to build up its own EV manufacturing to compete with China's dominance in the sector.

Are Automakers Betting on the Wrong Horse?

While the policy debate rages, automakers are making their own bets. A recent Reuters report highlighted that companies like Ford Motor Co. (F) and General Motors Co. (GM) have actually increased production of gasoline-powered trucks despite the rising fuel costs.

Greene thinks that gamble could backfire. "I wouldn’t be surprised to see the industry be compelled to shift production yet again, if gasoline prices do remain at current levels," he said. He concedes that brands love to push larger vehicles because of their fat profit margins, but market reality might force a change. If prices stay high, we could see a pivot toward more hybrid vehicle production.

And if the pain at the pump becomes a permanent fixture in household budgets? Greene thinks that's when pure EV makers will shine. "EVs will become the most cost-effective purchasing option at a customer's disposal," he said, as buyers start doing the long-term math on fuel costs. That scenario would mean better demand for manufacturers like Tesla Inc. (TSLA), Rivian Automotive Inc. (RIVN), and Lucid Group Inc. (LCID).

It's worth noting that Tesla itself just reported a disappointing first quarter, delivering over 358,000 vehicles but missing market expectations and ending up with its largest-ever inventory of unsold cars.

Is There a Way Out?

So what's the solution to getting out from under volatile fuel prices? Shifting the conversation to the broader crisis, Greene pointed out that while the U.S. can't do much about the supply shock from the closed Strait of Hormuz, "from a demand side, we absolutely can respond by trying to improve our energy efficiency and stop our reliance on oil."

His advice is twofold: be "very mindful of what sort of foreign entanglements and interventions" the country gets into, and double down on the shift away from oil toward more self-sufficient energy. It's a long-term play for security, but as current prices show, the short-term costs of inaction are already piling up at the pump.