The Real Cost of a Gallon of Gasoline

A few months ago, my wife and I decided that it was time to purchase a newer car for our family. Our two vehicles were old—my pickup is a 1993 Toyota T-100, and the family minivan is a 2002 Toyota Sienna, both closing in on 200,000 miles—and maintenance costs on both have been increasing. I drove over to Jim Barkley Toyota and walked into the sales room, where I was cheerfully greeted by one of their sales associates. I told him that I was interested in a slightly used Prius, the ubiquitous hybrid vehicle Toyota has sold since 2000. “Oh sure, we have plenty of those here,” he replied, continuing that he “couldn’t keep a truck on the lot” with gas prices so low. As a consumer, this was great news for me, but as an environmentalist, this reality disturbed me. That got me to thinking: Is there really that predictable of a relationship between gasoline price and the number of trucks and SUVs sold?

The answer is yes. For the 13 years from 2003 through 2015, there is a very strong, negative linear relationship between gasoline price per gallon (inflation-adjusted) and percentage of vehicles solid in the U.S. that are trucks and SUVs. (The regression outlier is from 2009, during the recession.) Translated into everyday terms, this means that when the price of gasoline is low, we buy more vehicles that are larger and less fuel-efficient, and when the price of gasoline is high, we turn to smaller, more fuel-efficient cars.

I’m all for consumer choice, so if my neighbor needs or wants a larger vehicle, then so be it. (After all, I own two of them!) However, a big problem is that the price per gallon we pay at the pump is not nearly the real cost of that gallon of gasoline to you and me as individuals and to society in general, if all external costs are considered. In a peer-reviewed journal article published in 2015, Professor Drew Shindell of Duke University estimated the environmental damages per gallon of gasoline to be $3.80, the damages including the shared burden of global mean climate change and global health burdens from poor air quality. Paying $6.00 or more per gallon of gasoline would be a tough pill to swallow for Americans, who’ve become quite accustomed to buying relatively cheap gasoline, but we ultimately end up paying for these external costs in other ways, such as in higher medical costs and higher home insurance premiums.

What’s to be done? Placing a price on carbon would go a long way. Fossil fuels companies would pay a fee per ton of carbon extracted, and of course they would pass along these costs to us, the consumers. We would face a choice: Buy the larger, less fuel-efficient truck, or go for the smaller, fuel-efficient option, given that the price at the pump would be higher, because the price of the gallon of gasoline would be closer to the real cost of burning it. Undoubtedly, more of us would choose the more fuel-efficient models. The projected extra cost on a gallon of gasoline would be approximately $0.15 per gallon upon implementation, and increasing roughly $0.10 per gallon per year. At some point, many consumers would choose a more fuel-efficient vehicle.

It is important to note that, under a Carbon Fee and Dividend (CF&D) model, the carbon fee collected would be returned to households each month, so this approach is revenue-neutral from a government standpoint. The best news from both a societal and an environmental perspective is studies predict that, during the first 20 years alone, a comprehensive CF&D policy (one that includes all fossil fuels—coal, oil and natural gas—and other greenhouse gases) would lead to a 50% reduction of carbon emissions below 1990 levels; the addition of 2.8 million jobs, driven by the economic stimulus of the energy dividend; and the avoidance of 230,000 premature deaths due to reduction in air pollutants that often accompany carbon emissions.

All we need is the political will to make this happen, to the betterment of us all.

Common Ground

This was an LTE in the Asheville Citizen-Times on January 18 (I think), 2017.

Amidst the chaos in Washington, D.C. of the past two weeks, a growing movement was mentioned on a big stage, though it was probably overlooked by many. During his Senate confirmation hearing, Rex Tillerson, President-elect Trump’s nominee for Secretary of State, re-stated that he supports a carbon fee as a policy to reduce greenhouse gas emissions, but only if the revenues generated were returned to taxpayers, a revenue-neutral proposition. Last month in Rolling Stone magazine, retired scientist James Hansen, the head of NASA’s Goddard Institute for Space Studies for nearly 35 years, and long-time climate activist, proposed exactly the same thing. Left meets right in the middle with a straightforward, effective plan for addressing the deep concerns the majority of us have about the effects of climate change, present and future. Perhaps we can, after all, find common ground.   

Into the Sunset with Coal

This piece appeared in the Asheville Citizen-Times on December 25, 2016.

A couple days ago, I asked this question of my environmental science students: “Given that West Virginia has about 1.8 million people, how many of them do you think are employed by coal companies?” What would you guess? The responses of my high school students ranged from 600,000 to 1.2 million. Those were high estimates, but would you guess that only about 15,000 residents of West Virginia are employed in the coal industry? The U.S. Energy Information Administration calculates the number of coal mining jobs in all of Appalachia to be just under 38,000; East of the Mississippi River that number is under 50,000, with a U.S. total of 66,000 coal mining jobs in 2015. In 1985, there were about 178,000 jobs in coal mining, so the trend is downward. Contrast that to the number of jobs being created in the renewable energy sector: Fortune estimates that 174,000 U.S. residents were employed in the solar industry alone in 2014, and the International Renewable Energy Agency reports that there were 769,000 total jobs in the U.S. renewable energy sector in 2015. A recent New York Times article states that Elon Musk, of Tesla and Solar City, has created nearly 35,000 jobs in manufacturing green energy components all by himself.

Our president-elect campaigned quite successfully as one who would “bring back coal,” and “kill” the Clean Power Plan (if implemented, the CPP would undoubtedly lead to less electricity with coal) when coal is not coming back. Economists and even electricity-generation executives agree that coal is on its way out, and for good reasons. First and foremost, for electricity generators, coal is more expensive than natural gas, which is now abundant given wide-spread use of hydraulic fracturing. For those concerned about greenhouse gas emissions and climate change (and every one of us should be concerned!), the stake in the heart of coal is that it produces twice the lifecycle greenhouse gas emissions (mining, construction, generation, decommission, etc.) as natural gas, twenty times that of solar photovoltaic, and forty times that of wind. GHG emissions is only part of the story, because the use of coal as a power source brings numerous external costs, such as reduction in life expectancy (particulates, sulfur dioxide, mercury, etc.), ecosystem loss and degradation, loss of IQ (mercury), and hospital respiratory admissions, to name a few. Never mind the Clean Coal campaigns in the coal fields of Appalachia—coal is not clean!

Before I am written off as an out-of-touch, tree-hugging liberal, know that I lived the first twenty-three years of my life in Coal City, West Virginia (you read that correctly), and that my father, my two grandfathers, and numerous uncles made their living in—you guessed it—coal. My mother was born on a mountain, just a couple of miles from my childhood home, that no longer exists because of mountaintop removal for coal extraction. Coal mining can, indeed, pay an excellent wage (the Bureau of Labor Statistics estimates the median wage to be over $25 per hour), but so can careers in the green industries of energy efficiency and renewable energy. If we as a nation decided once and for all that we throw most our efforts into developing these industries and humanely (in terms of taking care of those whose livelihood is affected, including job training and education) phasing out industries that are more extractive and polluting, just how many good-paying, earth-friendly jobs could we create? We could even become the world leaders in this arena—instead of China—exporting technologies and services around the world. Now that’s an idea we can all get behind!