[sustran] Re: fwd: The Real Price Of Gas

[Wendell Cox]

Where does one find the full report?
-----Original Message-----
From: SUSTRAN Resource Centre <sustran at po.jaring.my>
To: sustran-discuss at jca.ax.apc.org <sustran-discuss at jca.ax.apc.org>
Date: Tuesday, May 11, 1999 7:52 PM
Subject: [sustran] fwd: The Real Price Of Gas


>[forwarded from the kabelvag list on sustainable consumption]
>
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>Date: Tue, 11 May 1999 14:16:57 +0800
>Subject: [kabelvag] The Real Price Of Gas
>
>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.
>