In fact, no matter how high the market price for petroleum goes, it ought to be higher, since it won’t include the so-called “external costs” of using oil. For example, whenever I burn a gallon of gas in my car, I’m creating pollution and climate-warming emissions; fostering overseas military entanglements; increasing the risk of oil spills and pipeline leaks; siphoning money from the local economy into the bank accounts of unsavory oil magnates; yada yada. Each of those factors carries a cost — sometimes intangible, often hard to quantify, but real nonetheless. And because I don’t pay those costs when I fill up — I just let the rest of the globe pick up the tab — I tend to buy more gas than I otherwise would.
Of course, rising prices at the pump will eventually mean that consumers buy a little less gas. And while higher prices are a budget stretcher for lots of cash-strapped families (a fact we should be careful not to lose sight of) enviros tend to see a silver lining; if everyone buys less gas, the level of those “external costs” goes down. Right?
Only maybe not. In practice, skyrocketing oil prices may be a double-edged sword, not just for family budgets but even for the environment. Yes, pricier gas gives consumers incentives to conserve. But it also gives energy companies incentives to barrel ahead with energy projects that are even more disturbing and damaging than the ones we’re already dealing with.
Take, for example, this article from The Christian Science Monitor, covering some of the wacky, long-shelved energy plans that energy companies are beginning to dust off, now that high petroleum prices have made previously uneconomical projects seem profitable. The headline by itself is a pretty good synopsis:
With oil at $70 a barrel, firms try coal, shale, even turkeys
That’s right, there are energy companies trying to turn turkey innards into a petroleum substitute. Desperate times, desperate measures, and all that.
The big story here, though, is that high prices are building some momentum for alternatives to oil. But many of those alternatives — coal-to-diesel projects, extracting oil from oil sands and shale, etc. — may actually be worse for the planet than ordinary petroleum. Many of them involve even greater global-warming emissions, while ramping up air and water pollution and scarring previously untouched landscapes.
Just so, high oil prices are ramping up profits for big oil conglomerates that stand in the way of progress on global warming, while boosting incomes for some unsavory regimes overseas.
So while many environmental advocates may be secretly (or not so secretly) happy about rising oil prices, perhaps they shouldn’t be. In the long run, a higher market price for oil may simply increase the environmental and security costs of our oil habit. Even if higher prices force us to consume a bit less, the overall “external cost” of our consumption may go through the roof.
Now, I’m not sure this line of reasoning would hold up to closer scrutiny. But if it does, it may put enviros in a bind: rising oil prices may make it all the more important to increase taxes on petroleum, to cover the rising external costs. Only through rising taxes will consumers pay for the full costs of their petroleum habit.
But how likely is it that we can get politicians to raise gas taxes when outrage over gas prices is at its highest?
