What we Don’t Pay for at the Pump

Posted on June 22, 2011. Filed under: News | Tags: , , |

While we’ve already passed the longest day of the year, summer’s just getting started.  ‘Tis the season of road-trips, weekend jaunts to the shore, and enjoying the outdoors.  But most summer plans require some form of fossil fuel to get you there.  And as the average price for a gallon of gasoline tips over $4 , transportation costs are beginning to weigh more on Americans minds.   

 

However, a gallon of gasoline in the US is still far cheaper than in any industrialized country.  While many may think $4 is expensive, this price does not take hidden costs into account.

Hidden or external costs are costs that are not transmitted to the final retail price of a product and are incurred by a party who did not agree to the action causing the cost.

 

In the case of gasoline prices it’s the environment and human health that bear the burden of these external costs resulting from increased smog and air pollution and ecosystem damage from drilling and oil spills.  A recent study estimated that the cost of air pollution for the greater Los Angeles region adds up to more than $1,250 per person per year.  These are costs that are shouldered by individuals and not reflected in the price we all see at the pump.

 

Many European countries levy an “eco-tax” on gasoline sales in an attempt to account for external costs.  Proceeds from these taxes go towards supporting social programs and renewable energy development.  Arguments exist on both sides of the political spectrum with regard to adding additional costs to already painful prices at the pump –  but one thing is undeniable: the true cost of producing and consuming gasoline is much higher than what we’re paying.

 

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What’s that Oily Taste?

Posted on March 9, 2011. Filed under: News | Tags: , , , , |

 

The recent unrest in the Middle-East has helped push oil futures to multi-year highs.  After getting used to seeing gasoline prices in the mid-$2/gallon range, I was shocked to see my local Exxon selling premium gasoline at just under $4/gallon!  I thought to myself, “thank goodness I don’t own a car” and I kept walking.

But oil’s influence and reach goes far beyond just refined gasoline.  Per capita, Americans use more oil than people in any other country – about twice as much as Europeans.  Similar to our national addiction to fast food, our addiction to oil has many negative consequences.  The difficult thing is, an addiction to junk food has conspicuous symptoms for the individual like obesity, high blood pressure, and diabetes, whereas an addiction to oil has much less apparent and more dispersed consequences.

A shockingly high percentage of everything that we use, consume, and rely upon on a daily basis is either produced from or powered by fossil fuels and their byproducts – all of which grow more costly as the price of oil rises.  Every stage of a product’s life-cycle, from production, to transportation & distribution, to delivery & consumption require energy and ingredients to make the product — and an ever-present ingredient in our products and a majority of what powers us is oil or other fossil fuels.

Because we don’t see or know how much energy goes into the products and services that we purchase and consume, we’re shielded from knowing the full extent of our personal energy demands — and unprepared when rising oil prices increase the cost of everything else.

While I’m hoping that we don’t find ourselves in a tight economic bind due to spiraling consumer prices; perhaps coming to a shared realization that we are all interconnected and that our daily economic choices have real consequences, could help us in the long run.

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