“I look at the dynamic of the political infrastructure, and it looks to me like there are major subsidies that benefit all the fossil fuel companies. The consumer is never asked to pay a price, nor is the producer asked to pay a price for the negative externalities — whether it’s the pollutive aspect, or the conflict aspects of fossil fuel energy,” says Dylan.
Is what we pay at the pump an accurate measure of the real cost of a gallon of gas? Absolutely not — and the real price of fossil fuel is fairly distorted, meaning we’ve killed any incentive to make a transition. We decided to dig into the numbers a bit, and take a look back at the best insights on the problem we’ve heard so far.
The facts: America consumes roughly 145 billion gallons of gas a year, so dividing aggregate costs into that number gives us a more accurate per gallon cost. (This doesn’t include additional unknowable costs, like climate change, environmental cleanup after oil spills, and health costs.) Here’s what we can roughly estimate:
Current price of a gallon of gasoline: $3.70
+ Known Off-Balance Sheet Costs:
1. The “Security Premium,” or military spending. ($700bn – 1 Trillion): +$4-6/gal
2. Externalized pollution costs on human mortality ($345 billion according to the Union of Concerned Scientists) : +$2-3/gal
3. Gov’t subsidies, traffic, accidents, free parking ($200-400bn via Center for Technology Assessment), etc: +$1-3/gal
Actual cost of a gallon of gas = $10.70 to $15.70
This isn’t the first time we’ve discussed the need to start finding solutions to America’s addiction to expensive foreign oil, and to start being realistic about what it costs us.
WATCH: Dylan shares his energy manifesto and explains why a sustainable policy is achievable (from April 2011):
LISTEN: We had a conversation late last year with John Hofmeister, founder of Citizens for Affordable Energy and former CEO of Shell Oil that’s worth checking out. A great talk about the hidden, external costs of oil and gas in America.