Excerpted from an article by Paul Salopek of the Chicago Trib. All bolds and links are mine (Thanks to reader Chris for pointing me to this article):
What are the hidden costs of America’s imported oil?
Milton Copulos, an economist with the National Defense Council Foundation, a right-of-center Washington think tank, spent 18 months poring over hundreds of thousands of pages of government documents, toiling to fix a price tag on America’s addiction to global crude.
He parsed oil-related defense spending in the Middle East. He calculated U.S. jobs and investments lost to steep crude prices. He even factored in the lifelong medical bills of some 18,000 U.S. troops wounded in Iraq as of March. (About $1.5 million each.)
The actual cost of gasoline refined from imported oil, according to Copulos?
Eight dollars a gallon, he told the Senate Foreign Relations Committee last spring.
When he isolated hidden costs of Middle Eastern crude in particular, the price jumped to $11. This included a war premium that swelled the Pentagon’s spending to protect all Persian Gulf oil to $137 billion a year. In a truly transparent economy, by Copulos’ math, filling Rodriguez’s Jeep would run about $230.
Consumers pay for these expenditures indirectly, through higher taxes, or by saddling their children and grandchildren with a ballooning national debt — increasingly financed by foreigners. The result: Unaware of the true costs, U.S. motorists see no obvious reason to curb their oil habit.
“Gas isn’t too expensive,” Copulos said. “It’s way, way too cheap.”
In fact, many experts think Copulos’ Olympian feat of accounting is much too conservative. Nobody can calculate, they say, the future security cost incurred by funneling petrodollars to regimes that have incubated Islamic terrorism, such as Saudi Arabia. Or tally foreign oil’s role in global warming.
Damn. Drive less, people. I’ll be doing the same.
To read Milton’s whole 153-page study, titled “America’s Achilles Heel: The Hidden Costs of Imported Oil: A Strategy for Energy Independence,” download the PDF here.
Great stuff. All of this and much, much more is covered in Lester Brown’s ‘Plan B 2.0′ (which should arrive any day).
To think, we could shift taxes/subsidies away from oil and gas companies, let the price run to the ‘real cost’ at $11/gallon, and then move the subsidies to wind/solar/et cetera, reducing the price more than enough (in conjunction with personal tax cuts, much like the EU nations are doing) to offset $11/gallon gasoline. More importantly, we instantly spur EV sales and clean energy sources for the EVs. Heck, we can even leave a few subsidies in place to knock the price down to, say, $7, for luck.
The real trouble, however, is when we incorporate real cost of oil into everything we build. All the car parts, all the plastics, all the everything around us (appliances, toys, you name it).
Comment by Tod Brilliant — September 4, 2006 @ 8:20 pm
Looking forward to the book :) Thanks in advance! Is $7 a lucky number?
By “real trouble,” I’m wondering if you mean financial trouble for the lay person due to the extra cost of this stuff once we account for the true cost of oil. It’s a lil sad that we’ve gotten so dependent on this stuff — to the point that accounting for its true cost will really force us to reconfigure the way we live our lives –
Comment by Siel — September 4, 2006 @ 8:30 pm
This is sad reality- I think it doesn’t happen only in US- but also in other country like ours- Oil companies are greed- and liar I guess-The price is killing the consumer- The price is almost tripped of the actual price. Sad! Anyways, thanks for sharing this fact!
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