Most of us think that the
cost of gasoline is about $1.40 per gallon. This retail price is based on production
costs, delivery to local service stations, taxes, and profits throughout the system. But
like taxes, a lot of the costs of our petroleum-based energy system are hidden. They
don’t show up in the price we pay at the pumps. Instead, they’re paid in other
ways.
For example, a number of studies have been done to estimate the
environmental costs of burning oil. Figures vary widely because it all depends on the
value you place on particular environmental losses. And it’s difficult to determine
the increase in health care costs that are directly related to pollution from burning oil.
But a conservative estimation is that environmental degradation translates into real costs
that factor out to about $45 per barrel.
Another cost that we pay through higher taxes, instead of through higher
motor fuel prices, is the military expenses that are directly related to protecting Middle
East oil supplies. We’d have military expenses anyway, even if we didn’t have to
pay for protecting oil supplies. But if we isolate only those expenses that are directly
related to protecting Middle East oil interests, it factors out to about $9 per barrel of
imported oil.
The estimates vary widely on how this would affect motor fuel prices if
all the related costs were factored in. I’ve seen figures as low as $10 - $12 per
gallon, to as high as $16 per gallon. But the reality is that we’re paying for it
anyway - through higher insurance premiums, increased health care expenses, and higher
taxes.
These estimations are based on the level of military expenses, health care
costs, and environmental damage today. But in many cases, we’re just letting the
damage build up for future generations to pay. And the effects of global warming could
send these costs right through the ceiling over the next 25 years or so. So it really
comes down to the question of whether we can actually afford to continue with this
petroleum-based energy system. My sense of it is that, even with more expensive vehicle
technologies and more costly alternative fuels, we’ll be saving a bundle of money by
moving away from oil, not to mention the improvement in air quality and the security of
having a long-term sustainable energy system.
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