Study: You’re Really Paying More Than $6 Per Gallon for That Gas

Study: You’re Really Paying More Than $6 Per Gallon for That Gas

Although they’re starting to creep back up, Americans continue to enjoy relatively low gasoline prices, with the current national average of $2.50 per gallon down by about $1 over the same time last year. That’s the good news. The bad news is that new research suggests the price is actually much higher — you’re simply paying for it elsewhere and in other ways, largely in the form of damages to the environment and public health.

The new analysis, spearheaded by Drew T. Shindell, a professor of climate sciences at Duke University’s Nicholas School of the Environment, estimates that when these “social costs” are factored in, an extra $3.80 is added to the price at the pump. And not surprisingly, the same calculus holds true for the costs of virtually all fossil fuels, such that a gallon of diesel — currently averaging about $2.90 per gallon — actually costs $7.70. Electricity generated with natural gas jumps from 7 cents per kilowatt to 17 cents, while the cost of coal-fired power quadruples, from 10 cents per kilowatt hour to 42 cents.

The peer reviewed study, published in the journal Climatic Change, is the most recent in a growing body of research seeking to quantify the externalities associated with the use of fossil fuels — that is, those costs that aren’t currently baked into retail prices. We all pay those costs one way or another, and the federal government uses metrics like Shindell’s in order to weigh the potential impacts — and savings — that might arise from various emissions and pollution control rules.

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. There’s also a good deal of disagreement over how to properly factor in the economic concept of discounting — the idea that we’re naturally inclined to pay less to avoid damages that won’t manifest until some future date, as is the case with climate change.

And of course, it’s worth remembering that fossil fuels have provided multiple generations-worth of social benefits as well, lifting standards of living the world over.

But it’s clear that there are costs associated with fossil fuels use that aren’t reflected in your monthly electric bill, or on your local filling station’s marquee. Shindell’s analysis, which incorporates a wider array of pollutants arising from fossil fuel combustion — carbon dioxide, methane, nitrous oxide, carbon monoxide, mercury and a half-dozen others — is among the more robust analyses to date, and his findings underscore the benefits of making a transition to less polluting energy systems, or at the very least, doing everything possible to clean up the ones we’ve got.

The argument is even more compelling when considering the long list of other fossil-fuel externalities that weren’t factored into Shindell’s analysis. These include everything from ocean acidification and freshwater pollution to wholesale biodiversity losses.

“We think we know what the prices of fossil fuels are, but their impacts on climate and human health are much larger than previously realized,” Shindell said in a statement accompanying the study’s release. “We’re making decisions based on misleading costs.”

Source: Forbes

Date: March 2015

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