14 May 2010

Why Oil should pay for its true costs

I think the issue of legislation, now apparently killed in the Senate thanks to AK Sen. Murkowski, of making oil producers assume all liability for the costs of oil spills, really boils down to Econ 101. This isn't rocket science. 

I heard an estimate that if just the cost of environmental impacts (not including climate change impacts)... now assumed by the taxpayers were borne by oil producers, the cost per gallon of gasoline (and proportional costs for other petroleum products) would go up by about 29¢

I think it's a fair statement, as well, that a significant part of the military expenditures in the U.S., devoted to "security" in the "strategic region" of the Persian Gulf, is another hidden cost of petroleum, not borne by the producers or passed on to the consumers. There are other costs in terms of human rights violations in Nigeria and Myanmar, and the giant unknown of the costs of pouring so much carbon into the atmosphere, etc. The whole picture consists of one in which a significant part of the real costs of continued petroleum production are being borne by taxpayers, not just in the U.S. but in other countries, but especially in the U.S.

One has to ask, if these costs were imposed at the pump, as taxes, or as costs actually borne by the producers and thus passed on to consumers, would that not make the cost of renewable sources of energy more competitive... "level the playing field," as right-wingers like to say? If we actually knew the real cost, present and future, of continuing to recklessly consume petroleum (as if there were no tomorrow), I think we would be switching to other forms of transportation energy very quickly.

And much the same analysis would apply to the continued use of coal to generate electricity as well.

Of course, it takes time to transition to other means; and there have to be economic incentives for the R&D to be done to make the technological breakthroughs necessary to make things like microbial biofuels work, but as long as oil and coal are kept artificially cheap, it will remain very difficult for these things to happen. And time is ticking away, while the world's environmental crisis caused by the continued rampant burning of fossil fuels gets worse every day.

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