Is the Real Price of Gasoline as High as $15 Per Gallon?

In recent weeks, the national average gas price has slipped from a three-year high of $3.91 per gallon to $3.60 per gallon. That’s still way above what most Americans are used to shelling out for fuel, but as we’ve pointed out here in the past, it’s just a fraction of what consumers in Europe and dozens of other countries pay.

So with worldwide gasoline prices ranging from less than $1 per gallon to more than $10 depending upon where you buy, what’s the real cost of gasoline? Our friends at AutoBlog Green point us to a new video from the Center for Investigative Reporting, which attempts to answer that question by looking at what economists call the “externalities” of the petroleum market.

Externalities are costs paid by society for a product that are not included in its price. In the case of gasoline, those costs include the health care bills and lost productivity associated with pollution-triggered illnesses, reduced crop yields, oil spill cleanup, and carbon emissions.

In Los Angeles, the public health cost of air pollution is estimated to top $1,250 per person, per year. Worldwide, one study suggests that the external cost of gasoline falls somewhere between $550 billion and $1.7 trillion per year. That’s as much as 3 percent of the global annual gross domestic product.

All told, the video puts the true cost of gasoline as high as $15 per gallon. That means that while Americans consume an average of roughly $1,700 worth of petroleum each year (at current prices,) they may actually be racking up a bill that tops $6,000 annually.

Where does the extra money come from? Some of it is paid for by taxpayers and businesses in the form of health care costs and environmental cleanup efforts. But much of the bill is being racked up on borrowed money, as future generations will have to pay many residual costs of gasoline. According to the Natural Resources Defense Council, climate change attributed to carbon emissions alone will cost society $1.7 trillion per year by 2100.

 


  • MrEnergyCzar

    Soldiers dying to secure other countries resources are priceless so you can’t put a cap on the price….

    MrEnergyCzar

  • David

    Sorry, I never believe these stories. Oh, for certainly the ‘true’ cost of gas is higher than just what we pay at the pump, but stories like these are usually agenda driven. Every single one I’ve seen has been from the point of view of “Let’s lump everything that *I* want to attribute to gas prices into this report”. For example, do you lump the amortized cost of your car into part of “the price of gasoline” or do you put it in the category of “price I pay to get to work”?

  • James Davis

    Another try to justify these outrageous high gas prices. Should I also include cleaning up my house or mowing my lawn as an excuse for these high gas prices?

    Why not tell us the real reason for these high gas prices…greed, incredible greed.

    I know how to bring the price of a gallon of gas down to $0.00…start mass producing all electric cars and you will never have to buy another gallon of gas for as long as you live. There are also electric lawnmowers that can be charged with a small solar panel. Since you only use your lawnmower about once a week, there is plenty of time to recharge your battery.

  • Mr. Fusion

    Can someone explain to me how a gallon of gas that weighs about 6 lbs produces 25 lbs of pollution?

  • Yegor

    Indeed the price of gas is much higher than what we pay at the pump because of diseases that air pollution causes and the cost of military to secure the supply of oil but I agree with MrEnergyCzar Soldiers dying to secure other countries resources are priceless so you can’t put a cap on the price…. :(

    There is a solution in form of plug in and hybrid cars – there is no excuse not to go in this direction.

  • Old Man Crowder

    @ Mr. Fusion:

    I found this on the US Dept of Energy site:

    “It seems impossible that a gallon of gasoline, which weighs about 6.3 pounds, could produce 20 pounds of carbon dioxide when burned. However, most of the weight of the CO2 doesn’t come from the gasoline itself, but the oxygen in the air.

    When gasoline burns, the carbon and hydrogen separate. The hydrogen combines with oxygen to form water (H2O), and carbon combines with oxygen to form carbon dioxide (CO2).

    A carbon atom has a weight of 12, and each oxygen atom has a weight of 16, giving each single molecule of CO2 an atomic weight of 44 (12 from carbon and 32 from oxygen).

    Therefore, to calculate the amount of CO2 produced from a gallon of gasoline, the weight of the carbon in the gasoline is multiplied by 44/12 or 3.7.

    Since gasoline is about 87% carbon and 13% hydrogen by weight, the carbon in a gallon of gasoline weighs 5.5 pounds (6.3 lbs. x .87).

    We can then multiply the weight of the carbon (5.5 pounds) by 3.7, which equals 20 pounds of CO2!”

  • Roland

    As a Soldier currently serving in Afghanistan. I can say we aren’t dying here for Oil. These other Countries that charge $10 a gallon are also huge supporters of mass trans and are small countries that don’t require as extensive a network as the U.S. I believe along the lines of Yegor though about utilizing hybrids and electric cars. I also believe every home built in the U.S. should have solar, and thermal and be as near independent of electricity as possible.

  • dutchinchicago

    To david and the others. It would be nice if we could simply say that any facts we do not like are not true but that is not the way the world works.

    After you done extensive research you might come up with your own figure of what the true cost is of oil but just saying that you do not believe is not good enough. I stand with the experts until you have done that work and proven otherwise.

    How many reasons do we need to get of oil?

  • skeckyvegas

    In addition to the above comments, can we PLEASE find a different picture to use when talking about oil consumption?
    That damn burning Horizon rig pic has been so overplayed it’s lost its impact.
    How about something with a nice bunny?

  • Shoreline

    Sure; the chemical reaction that takes place in your engine combines a relatively small amount of fuel with truly immense amounts of air to produce both CO (carbon monoxide) and CO2 (carbon dioxide, a greenhouse gas) exhaust; so what’s happening is your car is taking a lot more through its air filter than it is through the gas line, and pumping most of it through the other end as CO and CO2; what’s left either gets caught in the catalytic converter or else smog-causing things like nitrous oxide or even plain old soot if the engine is out of whack. That’s how it works; that’s how you end up with a greater weight of CO2 coming out than gasoline coming in.

  • cld

    To put it in mass balance terms:

    1 mole heptane (C7H16) + 11 moles oxygen (O2) –> 7 moles CO2 + 8 moles water (H2O)

    Heptane has a formula weight of 100 g/mole, and CO2 has a formula weight of 44 g/mole, as you’ve stated. Therefore, for this conversion, 6.3 pounds of heptane would convert into (6.3 x 7 x 44)/100 = 19.4 pounds CO2.

    Heptane is only one component of gasoline; on average the conversion is going to be about 3.7/1, as you’ve stated.

  • cld

    Correction, 3.17/1 would of course give you 20 pounds CO2 from 6.3 pounds gasoline.

  • MrEnergyCzar

    Thank you for serving. A stable Afghanistan will allow us to be better positioned to go after Iran’s remaining oil deposits by basically surrounding them on 3 sides. It will also be easier to divert gas and oil pipelines away from Russian territories up North by going through Afghanistan and bringing that gas/oil to western markets away from Russian influence….

  • Roland

    Mr Energy Czar,

    Thats an interesting geopolitical idea that rings with merit. The only issue I see is how mountainous both Afghanistan and even more so with Pakistan this area is, and the difficulty of any pipeline that would be placed would attract more insurgents and the local populace to steal it. Much like Africa’s oil, employment and cost of living Afhanistan is already tied to those last two with $10 a day wages. I think we would have to be here another century just to get the pipe laid not counting the insurgency issues.
    Afghanistan wasn’t always like it is now. Back in the 70′s it was much like Amsterdam, very touristy and little religeon. People talk about how its a civil war, but it isnt. Most of society here remembers having those freedoms, but are unable to act out of fear of retribution. Much like our own southern border and its current issues. I myself work with an interpretor from here who is extremely grateful to have us here, and dreads the thought of leaving the job unfinished. then civil war would truly erupt.

    I got off topic. I enjoy reading the insightful discussions though.

  • Mr. Fusion

    Thank you Old Man Crowder and cld for the explanations.
    Very interesting and disturbing stuff.

  • 54mpg

    so why did we go to Afghanistan and Iraq?

  • Anonymous

    I can’t find a reference in the article about this so not sure where you got the numbers from but if I remember my high school chemistry correctly……

    - According to wikipedia, 6 lbs of gasoline contains about 5.-5.2 lbs of carbon (83-87%)
    - CO2 is one part carbon and two parts oxygen
    - Oxygen’s atomic weight is around 16 vs carbon’s 12
    - So 6 lb of gas can generate close to 20lbs of CO2 alone
    - The other parts of gasoline, including nitrogen, can make up a few extra lbs

    So I think 25lbs may be a little bit of exaggeration, but it’s not too far off.

  • David

    @DutchInChicago: Don’t take my comments to an extreme. If someone tried to say the ‘true’ cost of gas was over $5/gal, they’d have no trouble in supporting it. But I’ve seen some of these reports on the price of gas – one where the ‘true’ cost came out at an even more ridiculously high number (I wish I remembered the specifics). But when I did some math, multiplying that by the amount of gas we burn, I came up with a number higher than the country’s GDP.

    I’m all in favor of slowly rising fuel taxes (so as to avoid shocks to the economy) to pay for repairing infrastructure, more mass transit and making up for what SHOULD be declining revenues from gas taxxes as we migrate to more electric-based vehicles.

  • MrEnergyCzar

    @ Roland. I used to think they’d never drill 10K feet under water due to the extreme environment….. Under the north pole, through the mountains of Afghanistan… Strange things happen along the ugly down-slope of Peak Oil….

  • John Lovrich

    One carbon combines with two oxygen from the atmosphere to produce CO2. Carbon is element six, atomic weight about 12. Oxygen is element 8, atomic weight about 16. You are adding almost 3 times the mass of the carbon in oxygen. Of course it’s more complicated than that, but it’s intuitive and gets us thinking in the right direction.

    Also factor in that it takes a little over two gallons of crude oil to make a gallon of gasoline.

    Lastly, the weight of the product isn’t the whole issue, the energy required to produce and transport it is also included in their calculations.

  • Anonymous

    What is the real cost these made of figures?