The True Cost of Gasoline: $10 /gallon at the pump
Real Cost of oil Equates to $10 Gallon Gasoline
Source: IAGS
[Apr 02, 2006]
SYNOPSIS: Milton Copulos, president of the [National Defense Council Foundation] and Senior Fellow at the [Institute for the Analysis of Global Security] tells Senate the ‘hidden cost’ premium for imported oil amounts to $825 billion.
“A set of oil supply disruptions similar in scope to those of the 1970 could carry a price tag as high as $8 Trillion - a figure equal to 62.5% of our annual GDP or nearly $27,000 for every man, woman and child living in America,” warned Milton Copulos, president of the National Defense Council Foundation and Senior Fellow at the Institute for the Analysis of Global Security (IAGS).
Copulos, a founding member of the Set America Free Coalition, presented these figures yesterday at a Senate Foreign Relations Committee hearing on “The Hidden Cost of Oil.” In his testimony he released newly updated figures of his 2003 study “America’s Achilles Heel: The Hidden Costs of Imported Oil,” a comprehensive analysis of the external costs of imported oil. The study computed the externalities of imported oil and divided them into three basic categories: Direct and Indirect economic costs, oil Supply Disruption Impacts and military Expenditures in a non-war year.
Adding up the above, the hidden cost of oil imports skyrocketed to $779.5 billion in 2005. That would be equivalent to adding $4.10 to the price of a gallon of gasoline if amortized over the total volume of imports. For Persian Gulf imports, because of the enormous military costs associated with the region, the “hidden cost” was equal to adding $7.41 cents to the price of a gallon of gasoline. When the nominal cost is combined with this figure it yields a “true” cost of $9.53 per gallon.
This year, Copulos said, will present an even higher cost. “Because the price of crude oil is expected to remain in the $60 range this year, expenditures for imports are expected to be at least $320 billion. That amounts to an increase of $70 billion in spending for foreign oil in just one year. That increase would raise the total import premium or “hidden cost” to $825.1 billion, or almost twice the President’s $419.3 billion defense budget request for fiscal year 2006. If all costs are amortized over the total volume of imports, that would be equivalent to adding $5.04 to the price of a gallon of gasoline. For Persian Gulf imports, the premium would be $8.35. This would bring the “real” price of a gallon of gasoline refined from Persian Gulf oil to $10.86. At these prices the “real” cost of filling up a family sedan is $217.20, and filling up a large SUV $325.80.”
I had an IM exchange today with a veteran of three tours in the Middle East who wishes he could forget everything about all of them. So we put our troops through hell so we can continue our addiction? So we sacrifice thousands to support our inability to change? Tens of thousands have been maimed, killed, and scared forever so we can warm the planet and melt the ice without asking why, or challenging the Carbon Barons’ profit motives? Is this what they sacrificed for? It just about makes it immoral to use oil.
It is time we knew what the true, fully loaded, cost of gasoline and heating oil are. We cannot pretend that the fully loaded price does NOT include the cost of the military’s role in “securing” oil profits for the majors as appear to be the case in Iraq. The military cost of oil is NOT and externality that can be conveniently ignored. If we honestly believe in the power of a fair market economy, isn’t this what we should be paying at the pump, to heat our homes? The prices we are paying today are feel good fictions to keep us ignorant and addicted. Do the rules of the market economy only apply to everyone else, but not us? Are we been reduced to that level of hypocrisy?
What would you change if you were paying $10, or more, per gallon to drive to the mall? To work from suburbia? To buy a six pack? Go to the movies? To go to the ball game?
Does anyone have better, more current, data on the true cost of gasoline and heating oil? The price we would pay if we told ourselves the truth?
-- JockGill
