Gas Prices: A Blessing in Disguise?
friend recently forwarded me an e-mail chain letter urging me to
take action to help lower gas prices at the pump. The prospect of
$3.00 a gallon gas was waved like a red flag to spur me to send
this call to arms to ten other people. I've gotten other letters
like this. Typically, the actions they suggest are boycotting all
gas stations on a specific day of the week, or boycotting only the
biggies, Mobil and Exxon. None of them ever seems to mention significant
ways to REDUCE our addiction to oil...just ways that might allow
us to fuel our gas hogs for less money. The idea to force gas prices
lower is regarded by most people as a positive value. I disagree.
Back in 1950,
I was paying 17 cents a gallon for fuel. Cheap. Money was worth
about ten times more then, and so $1.70 a gallon is still cheap.
I regard even the $5.00 a gallon they are paying in Hong Kong as
way too cheap. Why? Read on.
make it clear that when we are talking about the PRICE we pay at
the pump, we are only talking about a part of the actual COSTS.
Some of that price goes to pay for crude oil, some to refining and
distribution, some to taxes. The true COSTS of burning fossil fuels
are, however, a LOT higher!
Just for fun,
let's grab some imaginary figures out of the air for the sake of
illustration when it comes to real costs and who pays them. Obviously
it is impossible to put monetary values on things like a child gasping
for breath or the value of a life lost "bringing freedom"
to the second most oil-rich country in the world. Still, we need
to consider the fact of hidden costs stemming from our addiction
to cheap gas.
PRICE One gallon
of regular unleaded pumped into your 15 MPG = $2.30.
COST OF BURNING
A GALLON OF GAS --(exaggerated for purposes of illustration) Property
loss in auto accidents = $1.00, pain, suffering, & hospital
costs from accidents = $1.00, traffic stress = $1.00, noise pollution
= $1.00, lung damage, medical and lost work = $1.00, asthmatic children's
suffering = $2.00, grief of people who have loved ones killed of
damaged in accidents = $2.00, ozone damage to rubber (tires, windshield
wipers, etc) = $.50, ozone damage to paint and plastic = $.50, atmospheric
warming/climate change leading to droughts and floods = $1.00, smog
damage to trees and crops = $1.00, loss of views of the mountains
= $.50, loss of farmland as people move further out and commute
= $.50, military spending to assure foreign oil supply = $2.00,
loss of human life to American soldiers for oil = $1.00, loss of
life among people in oil-rich countries we "liberate"
= $1.00, damage to wildlife and ocean from oil spills = $1.00, and
gallon of gas could cost us at near $20 per gallon in real terms.
The $2.00 price-at-the pump is way too cheap when you factor in
the above. You can dispute my figures, but you can't deny that what
we pay to Exxon or Mobil is NOT going to cover the TRUE COSTS. What
are we willing to do differently to reduce the effects of having
cheap gas which enable us to continue our fast-and-loose consumption?
It would be
nice to say, "Well, just double the price of gas and people
will only drive half as much, cutting accidents, smog, etc."
Unfortunately recent studies have shown that a 10% increase in the
price of gas only results in about a 1.5% reduction in sales. In
economists' terms, the demand for gasoline is "inelastic".
People do not easily adjust the amount of driving they do to respond
to changes in price. They just keep on driving, grit their teeth
and pay the higher price. If the price got to be, say, $50 a gallon,
the demand would of course drop drastically. Some basic and hard
choices would confront us and things would have to change.
It is easy
to see why we will pay an extra dollar or two. We have become totally
addicted to the things cheap gas has made possible: freedom to come
and go as we wish, take long vacation drives, commute two hours
a day to work from that dream house out in the country, fly back
to Aunt Tillie's funeral in Pennsylvania.
I think that
blame for the big oil companies, no matter how well deserved, misses
the crux of the issue, namely, you and me! Maybe they would do us
a big favor in the long run if they raised gas prices to the point
where we would have to rethink the mileage our vehicles get, whether
moving closer to work would make economic sense, whether just sending
Aunt Tillie's family flowers would do, or whether every teenager
really needs a car.
I once had
a conversation with a guy from San Diego, who was complaining about
the rise of smog, noise, and traffic in that lovely seaside city.
I asked him why, then, was he driving the huge gas-guzzling 15 MPG
station wagon he had parked beside him. "Oh," said he,
"I have to, I have six kids." I then asked him if he had
ever considered what was going to happen when each one of his kids
got his/her own car. " I hadn't thought about that..."
he replied. Well, maybe we'd better start thinking about our involvement
in the problems instead of just complaining, blaming, and boycotting
the oil companies.
There are other
factors that deserve our attention: 1) The earth is not making any
more oil, and what it has right now we are burning at an obscene
rate. 2) The more gasoline we burn, the worse air pollution becomes
and the worse our quality of life becomes. 3) We still have to pay
the hidden costs, and the more gas we use, the higher those costs
War II there was a national speed limit of 35 MPH to save gas. Gasoline
was rationed to only a few gallons a week ...just enough to get
you to work and back. Car poolers were rewarded with extra gas.
Would reinstituting this drastic policy increase our quality of
life? Would raising the price of drivers licenses and auto fees
help discourage driving? And what about limiting our population
so as not to have so many cars on the road? Should we be driving
vehicles that get twice to three times their present mileage? Should
we support building economical rail transportation systems rather
than building more freeways? Should we start moving back into the
cities to be closer to work? Should we support the raising of gas
We can make
choices bearing on this issue voluntarily, or we can have them forced
upon us. Higher gas prices would force us to rethink our life style
and $50 a gallon gas prices might, in the long run, prove to be
a blessing in disguise.
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