Americans, more than any other nation on earth, treat gasoline as if it were a necessary element for sustaining life, like air, water, and Caffè Lattes from Starbucks. We like to pontificate about unrestricted capitalism and allowing the dynamics of the free market to determine prices — but not when it comes to gas. When it comes to gas, we want it cheap, and the president had better get it for us or else, and if he can’t, then whatever else he’s done, he’s not doing his job. When the price of gas goes up by even a few cents, Americans go into a collective snit, outraged that they have to have to dig a little deeper to keep the family SUV filled.
A funny thing about Americans: we love to carp about paying too much for things we really need and are really a bargain, like gas and postage stamps, but we are more than happy to shell out outrageous sums for unnecessary stuff like gourmet coffee, fruit juice-infused water, and whatever new electronic gewgaw Apple is pushing this quarter.
Actually, the most astonishing thing about the price of gas in America is that Americans think the price of gas is astonishing. In most of the world a gallon of gas costs two to three times as much, except in a handful of countries where the price of gas is subsidized by the government (socialists!). For all our indignation, though, Americans do not demonstrate any sort of price-sensitive behavior when it comes to buying gas. According to the Oil Price Information Service, in a year when gas prices were at their highest level ever, Americans purchased more gas in 2011 than ever before. We bitched a lot, but we kept on pumping.
Maybe we should stop worrying so much about the price of gasoline and start considering its cost. The difference between what we pay for gas and what it costs represents the tax breaks and tax-funded services provided to energy producers to get that gallon of gas into your tank, along with other externalities, which are the costs of a private transaction borne by a third party.
Fuel-related pollution (vehicle exhaust, oil spills, et al.) and the health and environmental issues that result are negative externalities. More than a decade ago the bi-partisan International Center for Technical Assessment estimated that environmental, health and social costs represent the largest portion of the externalized price Americans pay for gas, with a total then approaching one trillion dollars annually.
Another hefty externality is the range of tax breaks and direct subsidies given to energy producers, dwarfed only by the indirect “program subsidies” Big Oil receives in the form of government-funded research and development, export promotion, infrastructure investment, environmental cleanup, and similar programs. All these subsidies, some $100 billion-plus according to the ICTA, are paid for by the American taxpayer.
Of course, much of the gas we use comes from oil imported from some notoriously unstable and often unfriendly locales. Even without adding in the hideous cost, both in dollars and in American lives, of the wars in Afghanistan and Iraq, U. S. defense spending for safeguarding oil interests in the Middle East and around the world typically total in excess of $100 billion a year.
We Americans must get serious about developing alternative fuels now, something which the rest of the world got serious about more than a decade ago. Even if we start drilling in every wildlife preserve and erect oil platforms off every public beach, we’d still be tapping only about two percent of the world’s oil supply. “Drill, baby, drill” isn’t going to solve anything, now or for the future.
The greatest irony of contemporary American life is that a nation which so prides itself on self-determination and independence has so willingly made itself a slave to oil, which corrupts our politics, dictates our foreign policy, threatens our environment, and bankrolls our enemies.