HOUSTON — Doug Vydrzal grabbed his backpack and headed out the door of Rudy’s "Country Store" and Bar-B-Q to the parking lot, where the gasoline cars fill up quickly and the Teslas fill up slowly.
The future mix of those customers — and specifically, how long they stay and eat — is a matter of great interest to Vydrzal. Rudy’s is tucked off Highway 290, near a business park. It is a purveyor of fuel and ribs situated just inside the western orbit of the Houston beltway. Started as a San Antonio-area filling station a century ago, the kitschy wood-fired barbecue franchise has become a roadside empire across Texas, Oklahoma and three other states.
To the casual eye, the row of Tesla chargers is nothing like the store, which has corrugated metal walls and folksy red-checkered tablecloths. Vydrzal, Rudy’s 45-year-old area director, inspected the sleek chargers and joked with customers who were waiting for their ultramodern cars to charge.
Those Teslas, on that day in early August, cut a tiny notch into the Texas energy economy. The drivers were using none of the colorless unleaded gasoline drawn from the state’s behemoth oil business. Instead, they were pulling fuel from an electric grid that draws power from West Texas wind and natural gas and coal generation across the state.
"We’re just high-tech rednecks," Vydrzal said, with a laugh, once he was back inside the restaurant.
Rudy’s online shopping page yells "SMOKED MEATS." Its gift card page quips, "Give ’em meat. Way tastier than cash." Selling brisket is where the money is, and that is in part why Rudy’s has been yanking gasoline tanks from some of its 44 locations; only about half sell the fuel today. Gas stations have high maintenance costs. The margins can be very slim. Pumps take up space that could be used for more parking.
And with more parking — and more people who could stay a while, like barbecue devotees or electric-car drivers — Rudy’s thinks it can sell more meat.
This store is the only Rudy’s in the Houston metropolitan region that still sells gasoline. However circuitously, the pumps on one end of Rudy’s parking lot remain bound to the power-packed liquid energy source that triumphed during the first age of the automobile and the refined product that’s helping to drive a resurgent Gulf Coast export economy.
The stamp of oil is everywhere in Houston. East and south of the city, refineries and petrochemical plants along the Houston Ship Channel churn out emissions. To the south, the world’s biggest commodity traders are clamoring to get more Gulf Coast port capacity built to accommodate an expected 3 million barrels a day in oil exports. To the west, oil majors are swallowing up smaller players as drillers set new production records in the hottest U.S. oil region, the Permian Basin.
The changes that may arrive with electric vehicles are, like the hour it can take to fill a Tesla, a long and slow process. But the red-and-white line of Tesla chargers at Rudy’s are akin to a row of seeds. They may transform how Texans get around, how retailers make money and how coastal metropolises deal with rising transportation emissions and the effects of global warming.
Outside the nighttime glare of Gulf Coast refineries, there are real people — gas station owners, fuel truckers, enterprising electricians, restaurateurs — whose livelihoods and lifestyles hang on whether Houston turns toward electric cars, and how soon.
According to analysts at Bloomberg New Energy Finance, 57% of all passenger vehicle sales and more than 30% of the global car fleet will be electric by 2040. Ford, General Motors and Volkswagen are joining Tesla in the race to build the small electric SUVs and electric pickup trucks that could transform the American market for good.
Who will be the winners and losers in this switch from gas to electric? It’s hard to say in 2019, but here we examine how people in Houston’s middle economic rung are thinking through the transition. And we consider what this means in the context of Houston’s slow-baking effort to wean cars off oil and to bring more planning to a sprawling landscape.
A cascade of change
Rudy’s started selling barbecue in 1989 as Phil Romano, the founder of Romano’s Macaroni Grill, envisioned the brand as a fuel-and-barbecue concept that would attract drivers and diners.
To be sure, selling gasoline is still part of Rudy’s business. But as Rudy’s shut off gas pumps at some locations, Tesla came calling a few years ago. The electric car pioneer is trying to piece together a line of charging locations for its customers. And that idea could pull new people into a store like Rudy’s. Today, three Rudy’s have a fleet of Tesla chargers and another charger location is being completed. Universal chargers are in the process of being added at a Rudy’s in Oklahoma.
The idea is to turn the eccentric into the ordinary, where electric cars evolve into a natural fit with smoked meats, cowboy boots and pickup trucks.
"If you don’t evolve, you kind of get left behind," Vydrzal said.
The technological shift can be viewed through a Rudy’s locale south of Houston, not far from NASA’s Johnson Space Center. Gasoline pumps were pulled out after continuing maintenance costs, tied in part to the high water table. Tesla chargers are being put in.
With that, a cascade of change begins to take effect upstream of there, from the oil field to the refinery to the independent fuel truck drivers. Further, it suggests the area could see fewer choices for unleaded gasoline. Pump sales as a percentage of total retail profits are in decline across the industry as convenience stores account for larger slices of the pie. And big players, such as the Buc-ee’s chain in Texas, account for large volumes of gasoline sales at the pump.
The increase in demand for electricity as Rudy’s adds new chargers in the Houston area isn’t quite as easy to discern. Ultimately, it’s a blip on the Texas grid. But Texas also has one of the tightest electricity reserve margins in the country. Its mostly self-contained grid saw emergency conditions on two days in August, though a variety of efforts avoided rotating outages.
Yet at some point there’s a critical mass of new electricity demand. Shifting sources of wind power and gas plants to replace coal-fired power raises the stakes for the Texas grid operator if more fueling stations go electric.
The number of U.S. gasoline stations is falling as high real estate costs make the sites more valuable to other types of businesses. The prospects for growth in electric cars and the decentralized network of chargers present another stress, said Frank Mycroft, CEO of Booster Fuels.
"This idea that the corner gas station can offset their revenue loss simply by installing charging might not be true," he said.
The city of Houston has a goal of carbon neutrality by 2050. To reach that, experts say transportation reforms have to be on the table.
"We think by addressing comprehensively electric vehicles we can start to change the conversation about energy consumption, about the environment and about equity in the city," said Ramanan Krishnamoorti, chief energy officer at the University of Houston.
The Houston area has to embrace new ideas for change to a landscape that relies on oil, even if the jury’s still out on what’s achievable in the nation’s fourth-largest city, said Stephen Klineberg, founding director of the Kinder Institute for Urban Research at Rice University. "It is absolutely clear that 30 years from now we’ll be doing things differently," he said. "Question is, is it 30 years or … is it 10 years."
On an average weekday, the region’s transportation network handles 180 million vehicle miles of travel, according to a report from the Houston-Galveston Area Council. That figure could be 63% higher in 2045 given expected growth in jobs and people, the council said. The report noted that the region has been a nonattainment area for federal ground-level ozone standards.
Besides air quality, Krishnamoorti asserts a shift to electric cars would, in fact, be beneficial if oil is used in other ways more efficiently. "My feeling is that this will be a gentle transition, but being ahead of the curve is where Houston needs to be," said Krishnamoorti, who drives a Tesla.
A report from Boston Consulting Group said as much as 80% of the fuel-retail network, as currently constituted, could be unprofitable in 15 years. Looking further out, and more regionally, Krishnamoorti said it’s possible that 75% to 85% of the light-duty vehicles in Houston could be zero-emissions by 2050.
The Houston Chronicle recently examined the future of area gasoline stations, saying there are more than 2,500. That suggests thousands of jobs are at stake.
Krishnamoorti expects the effects on gasoline retailers to be gradual in Houston, with perhaps a loss of 1% to 2% of stores per year over 30 years. And remaining sites could transition toward electric charging.
Future of limitless growth
Lara Cottingham, Houston’s chief sustainability officer, sees her job through the lens of global climate goals and Hurricane Harvey. Leaders are hoping Harvey will remain a catalyst for change in Houston, where extreme damage caused by the storm’s $125 billion wrecking ball has been credited to fast, chaotic growth and the city’s lack of zoning laws. The city issued a draft climate action plan in July to help set out a possible path forward.
"If you go to the big name oil and gas companies, their shareholders are asking them the same questions that people are asking the mayor and City Council," Cottingham said.
Still, the Houston Chronicle reported recently that an industry-funded group wants natural gas to be part of the city’s climate action plan.
Bob Harvey, CEO of an influential business group called the Greater Houston Partnership, said skills in traditional energy are relevant in a "new" energy economy that he wants Houston to lead. He sees big potential for electric cars in a region that struggles with pollution, but he also noted a continuing need for oil globally.
Some advocates contend the days of limitless growth are giving way to a bigger conversation about traffic, shared rides and the environmental impact of more cars on the road. Close to half of Houston’s greenhouse gas emissions in 2014 were tied to transportation, according to a city presentation.
How people move around the city has spawned a fierce debate over a plan to expand and change parts of Interstate 45, the heavily congested elevated north-south spine through the center of Houston. The city’s mayor, Sylvester Turner (D), supports the $7 billion widening project to plan for more growth.
To critics, the I-45 expansion is adding even more concrete where it’s not needed.
For city officials, some ideas for slashing emissions rest in their fleet. Converting the city’s nonemergency light-duty municipal fleet to electric is on the table.
The penetration of electric cars is tiny on a percentage basis in the region. Data posted online by the Greater Houston Partnership show that trucks and sport utility vehicles combine for higher sales than cars in the Houston area. Bigger EVs could help reshape demand in a place like Houston.
"We’re going to see rapid adoption when vehicles are available in the classes that residents of the Greater Houston area typically buy," said CenterPoint Energy’s Michael Conklin, who works on a partnership with the city to shift the focus to electrification. "And they have to be within a price range at which they would consider them."
The Houston area may be known by many for its cluster of chemical and refinery complexes along the Houston Ship Channel. But Chris Mohasel is focused on running an electric charger installation business called Go Green Texas EV.
Oil is a family affair for Mohasel. The 24-year-old whose father is an engineer for Exxon Mobil Corp. has lived in Europe and the Middle East, and he spent formative years in Houston. But Mohasel, the young entrepreneur, said the industries that dominate Houston’s economy today don’t completely define the place or its potential as a hub for green businesses.
With some startup help from his family, he began a charging business last year that’s a nod to Silicon Valley and, to a rising degree, Detroit auto companies that are committing billions of dollars to retooling for electric models.
"What sane person doesn’t want to live in a city where there’s no exhaust fumes coming from cars?" he asked.
Mohasel has helped oversee work to install two chargers at an apartment complex near downtown Houston, for example. "You have to educate yourself quite a bit," he said. "You have to know more than your competitors."
To Mohasel, the electricity zipping into the battery packs of Teslas, BMWs and, according to auto industry plans, 2025 Ford, GM and VW models can be framed as a pocketbook question. It might take $40 to fill up his BMW to go 400 miles with gasoline, he said, and maybe a few dollars at home to fill up a Tesla that goes 250 miles.
Keeping his business on track with a quickening — but still gradual — transition to a larger electric car market is more complex. Mohasel’s business has residential and commercial jobs under its belt. The $1,000 or $2,000 price tag for a residential charger and installation could go up or down based on the layout of a house and more broadly on how the housing market shifts.
Houstonians are progressive people who are open to new ideas, he said, and he sees the potential for an EV business in Texas and beyond.
"For now, I’d really like to build this up," he said.
‘Love, love, love it’
Vydrzal has been with Rudy’s since 2000. While some stores operate under a franchise arrangement, he currently oversees four company stores — two in the Houston area and two in Oklahoma.
Rudy’s is doing things much like it did when he first started. It uses the same rub and cuts meat the same way. That doesn’t mean it’s not evolving. It added sandwiches at many locations. And now it’s embracing a new approach to energy. Vydrzal estimates that maybe 50% of people who charge at a Rudy’s will come inside during their stop, and that’s more revenue.
At the Highway 290 store, Rudy’s pays as much as a few thousand dollars per month to Tesla to help cover ongoing costs. But Tesla paid for the installation and there’s a monthly cap on Rudy’s share at the site in northwest Houston, Vydrzal said.
Rudy’s didn’t provide a breakdown of sales, but Vydrzal believes the chargers have generated additional traffic.
Yet by the standards of a century’s worth of human experience filling up gasoline cars, the chargers are painfully slow. Drivers at Rudy’s might spend an hour to make sure they can drive more than 200 miles. In that time, dozens of cars might come and go at the gasoline pumps.
There at Rudy’s last month, the future of EVs unfolded one driver at a time.
Early adopters of EVs rested in air-conditioned comfort as a cord pumped electrons into their cars. They sometimes made phone calls or played games, but it was a wait.
Yet they didn’t appear unhappy with the decision to go electric during the recent visit.
"Love, love, love it," said Faith Ettehadieh, 47, a patient care specialist.
Ettehadieh was filling up a Model S car during a recent trip because her Model X — complete with doors that lift up on the sides — was in the shop after an accident.
Driving an EV changes a person’s perspective on driving, she said. "It’s so fun to pass people," she said. "You’re like, ‘I want to pass you, voom.’"
For Sunil Aradhya, a 32-year-old physician, it’s largely about the tech and the safety. A Tesla is far and away the most technologically advanced vehicle on the road, he asserted. He uses semiautonomous features that include lane-switching.
People care about the environment, he said, but they also get distracted. "That’s the crux of it. And they want to be able to feel safe — and I feel a lot safer in this vehicle," he said.
Aradhya misses the roar of the internal combustion engine. Sometimes he thinks about what would happen if the Tesla’s screen went out. "It’s not really a car that you’re driving," he said of the Tesla. "It’s like if you’re experiencing flying in a plane."
Then there’s Abraham Barrera, a financial adviser. He called himself a fanboy of Elon Musk, the face of Tesla. Barrera, 34, sees him as a visionary.
"I’m not trying to change the world by driving electric," he said. "It’s more about following the vision of Elon Musk and SpaceX and wanting to be a part of it."
The exact endgame isn’t clear even to Tesla owners. There is optimism that electric vehicles can succeed — and that Houston and the oil industry can, too. But that doesn’t mean the road won’t be bumpy.
"I think oil and gas is unsustainable," said Aradhya, the physician. "For vehicles, anyway."