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.