What’s The True Cost of Gasoline?

Gas pricesFinancial markets notwithstanding, most of us were happy to see gas prices fall. It has certainly helped to put a little extra breathing room in our household budgets, even though we suspect it could lead to increased use of fossil fuels. On the other hand, it could open the door for some new initiatives to help control emissions, such as a carbon tax, or a fee and rebate plan that would tax the production of fossil fuels and give the proceeds out to all Americans.

Perhaps this would be a good time to take a closer look at what that gallon of gasoline actually costs us, when all the impacts are considered. That’s what  Drew Shindell, a professor at Duke University, attempted recently in a study that was published in the journal Climatic Change. In an article entitled “Social Cost of Atmospheric Release,” Shindell developed and tabulated a means to assess the “climate damages” associated with various greenhouse gases including CO2, aerosols, methane and nitrous oxides. All told, 10 different pollutants are considered. With these costs added in, Shindell said we are actually paying $6.25 for a gallon of regular or $7.72 for a gallon of diesel. That’s quite a bit more than the latest AAA reported national average price of $2.429.

So, the question is: How is this figured, and who exactly is paying for it? Shindell takes the approach of calculating a yearly emissions price tag, which he estimates is between $330 billion and $970 billion (depending on how you compute the discount rate), and then allocates between the various emission sources.

His focus is primarily on health-related costs. For example, he points out that, “air pollution in the United States sends about 150,000 people to the hospital every year and causes 180,000 non-fatal heart attacks.” While that might not directly impact each of us if we don’t get sick, it certainly does affect the rising cost of health care, which does affect us all. Beyond the health impacts, there are, of course, environmental impacts to be considered as well.

As Tom Zeller pointed out in Forbes, “It’s a complicated exercise, and no one believes that any particular model accurately captures all of the potential damages that might arise from the use of fossil fuels.”

But it’s part of a growing effort to capture and quantify what have heretofore been known as externalities. In a perfect world, the impacts and implications of all economic transactions will be understood and accounted for. Without that, inequities will always collect in blind spots that appear as opportunities that are too good to be true. But only by considering all impacts — present and future, local and distant — can we ever hope to have a truly sustainable society.

These efforts must not only estimate the various impacts of each type of energy consumption, but also predict what the blend of contributing sources will be in the coming years. Further complicating the task is trying to quantify the full impact of adding or subtracting greenhouse gases into the atmosphere, given the complex dynamics and the existence of non-linear factors such as positive feedback loops.

While fossil fuel companies will be quick to point out the many benefits of their products, the fact is that, while the negative impacts affect all people equally, the benefits are not so equally distributed.

Shindell applies the same analysis to electric power generation and heating. If you heat your home with natural gas, the actual cost is roughly double what you pay. As for electricity, he estimates the true cost of coal to be 30 cents per kilowatt-hour rather than 10 cents. Applying the same formula, natural gas-generated power goes up from 7 cents to 17 cents per kilowatt-hour. Neither renewables or nuclear power carry any additional cost, according to the analysis.

No doubt there will be continuing debate on the many fine points that such an analysis needs to consider, but the fact that we’ve started down this path can only be seen as a good thing.

Image credit: cacjones: Flickr Creative Commons

RP Siegel, PE, is an author, inventor and consultant. He has written for numerous publications ranging from Huffington Post to Mechanical Engineering. He and Roger Saillant co-wrote the successful eco-thriller Vapor Trails. RP, who is a regular contributor to Triple Pundit and Justmeans, sees it as his mission to help articulate and clarify the problems and challenges confronting our planet at this time, as well as the steadily emerging list of proposed solutions. His uniquely combined engineering and humanities background help to bring both global perspective and analytical detail to bear on the questions at hand. RP recently returned from Abu Dhabi where he attended the World Future Energy Summit as the winner of the Abu Dhabi blogging competition.

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RP Siegel

RP Siegel, author and inventor, shines a powerful light on numerous environmental and technological topics. His work has appeared in Triple Pundit, GreenBiz, Justmeans, CSRWire, Sustainable Brands, PolicyInnovations, Social Earth, 3BL Media, ThomasNet, Huffington Post, Strategy+Business, Mechanical Engineering, and engineering.com among others . He is the co-author, with Roger Saillant, of Vapor Trails, an adventure novel that shows climate change from a human perspective. RP is a professional engineer - a prolific inventor with 52 patents and President of Rain Mountain LLC a an independent product development group. RP recently returned from Abu Dhabi where he traveled as the winner of the 2015 Sustainability Week blogging competition.Contact: bobolink52@gmail.com

6 responses

  1. Gasoline comes from oil. The backers, partners and silent partners of the Intercontinental Exchange in Atlanta rig the oil and gasoline prices. Google and read the “$2.5 Trillion Oil Scam – slideshare.” The US and most of the world are victims of this scam.

  2. Prices may well be dropping for gas in the US but up here in tar sands country (Canada), drivers are watching prices soar even as the glut of crude oil continues to drive crude prices through the floor.
    When the bottom fell out of the oil industry late last year retail prices for regular gas in Canada was around $1.30 per litre. Those prices fell to as low as $.90 per litre for a while, but in recent weeks the price has been spiking back up and is currently at $1.15 per litre here in the Southern Interior of BC. In Vancouver they are up to more than $1.30 per litre. In the meantime crude prices remain down by more than 50 percent since the peak last year.
    Why? Because they can. That’s the cost of having a friend of big oil acting as Prime Minister for Canadians.
    Now, should you operate a phone service, a railway or be in the entertainment industry (TV), you know every step you take toward increasing profits will be tracked and, if anyone complains, you become a bully-boy issue for Stephen Harper just as clothing options are now subject to his wrath if you happen to be foreign and female and seeking citizenship.
    Now, suddenly Canada is dealing with a new “terrorist” law introduced by Harper that, if passed as it stands will turn protestors against the tar sands and the rest of the oil industry into prime “terrorist” suspects for Canada’s security services.
    If this sounds too far fetched for you I invite you to google Canada’s Bill C-51 and read it for yourself.

      1. Very good piece RP. Yes, speaking out about the causes and effects of climate change is apparently a threatening gesture if your name is Koch and you happen to lease a good chunk tar sands land and also contribute greatly to extremely right wing and increasingly paranoid politicians.

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