>From: "M A Jones" <jones118 at lineone.net>
>Reply-To: marxism at lists.panix.com
>To: "Pen-L at Galaxy.Csuchico.Edu" <pen-l at galaxy.csuchico.edu>
>CC: "Marxism at Lists.Panix.Com" <marxism at lists.panix.com>
>Subject: The real price of gas: $15 a gallon?
>Date: Thu, 11 May 2000 08:54:44 +0100
>
>[of course, if you paid the proper price for the stuff you'd be lucky to be
>even driving a Lada... Mark]
>
>The Real Price Of Gas
>
>Executive Summary
>
>This report by the International Center for Technology Assessment (CTA)
>identifies and quantifies the many external costs of using motor vehicles
>and the internal combustion engine that are not reflected in the retail
>price Americans pay for gasoline. These are costs that consumers pay
>indirectly by way of increased taxes, insurance costs, and retail prices in
>other sectors.
>
>The report divides the external costs of gasoline usage into five primary
>areas: (1) Tax Subsidization of the Oil Industry; (2) Government Program
>Subsidies; (3) Protection Costs Involved in Oil Shipment and Motor Vehicle
>Services; (4) Environmental, Health, and Social Costs of Gasoline Usage;
>and
>(5) Other Important Externalities of Motor Vehicle Use. Together, these
>external costs total $558.7 billion to $1.69 trillion per year, which, when
>added to the retail price of gasoline, result in a per gallon price of
>$5.60
>to $15.14.
>
>TAX SUBSIDIES
>
>The federal government provides the oil industry with numerous tax breaks
>designed to ensure that domestic companies can compete with international
>producers and that gasoline remains cheap for American consumers. Federal
>tax breaks that directly benefit oil companies include: the Percentage
>Depletion Allowance (a subsidy of $784 million to $1 billion per year), the
>Nonconventional Fuel Production Credit ($769 to $900 million), immediate
>expensing of exploration and development costs ($200 to $255 million), the
>Enhanced Oil Recovery Credit ($26.3 to $100 million), foreign tax credits
>($1.11 to $3.4 billion), foreign income deferrals ($183 to $318 million),
>and accelerated depreciation allowances ($1.0 to $4.5 billion).
>
>Tax subsidies do not end at the federal level. The fact that most state
>income taxes are based on oil firms' deflated federal tax bill results in
>undertaxation of $125 to $323 million per year. Many states also impose
>fuel
>taxes that are lower than regular sales taxes, amounting to a subsidy of
>$4.8 billion per year to gasoline retailers and users. New rules under the
>Taxpayer Relief Act of 1997 are likely to provide the petroleum industry
>with additional tax subsidies of $2.07 billion per year. In total, annual
>tax breaks that support gasoline production and use amount to $9.1 to $17.8
>billion.
>
>PROGRAM SUBSIDIES
>
>Government support of US petroleum producers does not end with tax breaks.
>Program subsidies that support the extraction, production, and use of
>petroleum and petroleum fuel products total $38 to $114.6 billion each
>year.
>The largest portion of this total is federal, state, and local governments'
>$36 to $112 billion worth of spending on the transportation infrastructure,
>such as the construction, maintenance, and repair of roads and bridges.
>Other program subsidies include funding of research and development ($200
>to
>$220 million), export financing subsidies ($308.5 to $311.9 million),
>support from the Army Corps of Engineers ($253.2 to $270 million), the
>Department of Interior's Oil Resources Management Programs ($97 to $227
>million), and government expenditures on regulatory oversight, pollution
>cleanup, and liability costs ($1.1 to $1.6 billion).
>
>PROTECTION SUBSIDIES
>
>Beyond program subsidies, governments, and thus taxpayers, subsidize a
>large
>portion of the protection services required by petroleum producers and
>users. Foremost among these is the cost of military protection for oil-rich
>regions of the world. US Defense Department spending allocated to safeguard
>the world's petroleum resources total some $55 to $96.3 billion per year.
>The Strategic Petroleum Reserve, a federal government entity designed to
>supplement regular oil supplies in the event of disruptions due to military
>conflict or natural disaster, costs taxpayers an additional $5.7 billion
>per
>year. The Coast Guard and the Department of Transportation's Maritime
>Administration provide other protection services totaling $566.3 million
>per
>year. Of course, local and state governments also provide protection
>services for oil industry companies and gasoline users. These externalized
>police, fire, and emergency response expenditures add up to $27.2 to $38.2
>billion annually.
>
>ENVIRONMENTAL, HEALTH AND SOCIAL COSTS
>
>Environmental, health, and social costs represent the largest portion of
>the
>externalized price Americans pay for their gasoline reliance. These
>expenses
>total some $231.7 to $942.9 billion every year. The internal combustion
>engine contributes heavily to localized air pollution. While the amount of
>damage that automobile fumes cause is certainly very high, the total dollar
>value is rather difficult to quantify. Approximately $39 billion per year
>is
>the lowest minimum estimate made by researchers in the field of
>transportation cost analysis, although the actual total is surely much
>higher and may exceed $600 billion.
>
>Considering that researchers have conclusively linked auto pollution to
>increased health problems and mortality, the CTA report's estimate of $29.3
>to $542.4 billion for the annual uncompensated health costs associated with
>auto emissions may not adequately reflect the value of lost or diminished
>human life. Other costs associated with localized air pollution
>attributable
>to gasoline-powered automobiles include decreased agricultural yields ($2.1
>to $4.2 billion), reduced visibility ($6.1 to $44.5 billion), and damage to
>buildings and materials ($1.2 to $9.6 billion). Global warming ($3 to $27.5
>billion), water pollution ($8.4 to $36.8 billion), noise pollution ($6 to
>$12 billion), and improper disposal of batteries, tires, engine fluids, and
>junked cars ($4.4 billion) also add to the environmental consequences
>wrought by automobiles.
>
>Some of the costs associated with the real price of gasoline go beyond the
>effects of acquiring and burning fuel to reflect social conditions
>partially
>or wholly created by the automobile's preeminence in the culture of the
>United States. Chief among these conditions is the growth of urban sprawl.
>While monetizing the impact of sprawl may prove a challenging endeavor,
>several researchers have done significant work on the subject. The costs of
>sprawl include: additional environmental degradation (up to $58.4 billion),
>aesthetic degradation of cultural sites (up to $11.7 billion), social
>deterioration (up to $58.4 billion), additional municipal costs (up to
>$53.8
>billion), additional transportation costs (up to $145 billion), and the
>barrier effect ($11.7 to $23.4 billion). Because assessment of the costs of
>sprawl is somewhat subjective and because study of the topic remains in a
>nascent stage, the CTA report follows the lead of other researchers in
>field
>of transportation cost analysis and reduces the total of the potential cost
>of sprawl by 25% to 50% to arrive at a total of $163.7 to $245.5 billion
>per
>year.
>
>OTHER EXTERNAL COSTS
>
>Finally, external costs not included in the first four categories amount to
>$191.4 to $474.1 billion per year. These include: travel delays due to road
>congestion ($46.5 to $174.6 billion), uncompensated damages caused by car
>accidents ($18.3 to $77.2 billion), subsidized parking ($108.7 to $199.3
>billion), and insurance losses due to automobile-related climate change
>($12.9 billion). The additional cost of $5.0 to $10.1 billion associated
>with US dependence on imported oil could rise substantially, totaling $7.0
>to $36.8 billion, in the event of a sudden price increase for crude oil.
>
>RECOMMENDATIONS
>
>The ultimate result of the externalization of such a large portion of the
>real price of gasoline is that consumers have no idea how much fueling
>their
>cars actually costs them. The majority of people paying just over $1 for a
>gallon of gasoline at the pump has no idea that through increased taxes,
>excessive insurance premiums, and inflated prices in other retail sectors
>that that same gallon of fuel is actually costing them between $5.60 and
>$15.14. When the price of gasoline is so drastically underestimated in the
>minds of drivers, it becomes difficult if not impossible to convince them
>to
>change their driving habits, accept alternative fuel vehicles, support mass
>transit, or consider progressive residential and urban development
>strategies.
>
>The first step toward getting the public to recognize the damage caused by
>the United States' gasoline dependance is getting the public to recognize
>how much they are paying for this damage. The best way, in turn, to
>accomplish this goal is to eliminate government tax subsidies, program
>subsidies, and protection subsidies for petroleum companies and users, and
>to internalize the external environmental, health, and social costs
>associated with gasoline use. This would mean that consumers would see the
>entire cost of burning gasoline reflected in the price they pay at the
>pump.
>Drivers faced with the cost of their gasoline usage up front may have a
>more
>difficult time ignoring the harmful effects that their addiction to
>automobiles and the internal combustion engine have on national security,
>the environment, their health, and their quality of life.
>-----------------------------------------
>
>
>Mark Jones
>http://www.egroups.com/group/CrashList
>
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