The True Cost of Gas

Posted by Max Dunn Wed, 28 Jan 2009 01:35:00 GMT

The price we pay for a gallon of gas at the pump doesn’t include all the costs associated with it, like environmental costs and tax subsidies. One older study found that if we included all of these, we would be paying and extra $5 to $14 per gallon!

However, if we look at just the cost spent on military defense of oil in the Persian Gulf, it would be less than this.

One rough estimate would be to assume that 15% of the $430 billion DoD budget was spent on defending our oil interests in the Persian Gulf. Spread over the 142 billion gallons of gas we use each year, it works out to $0.46 per gallon.

Of course the hard number to determine is how much of the military budget goes to just protecting oil in the Persian Gulf. The $65 billion seems to fall in the middle range of what is spent on that region, but there is a lot of differences in opinion over how much spending would be reduced if we didn’t need to protect the oil there.

Here are some of the studies and what they determined we would need to add to the price of a gallon of gas to cover the cost of protecting oil in the Persian Gulf:

So don’t assume the price you pay at the pump is the true cost of gasoline. There are a lot more costs hidden away in making that gasoline available and in the environmental problems it causes that you pay for elsewhere.

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Comments

  1. JR said 1 day later:

    Perhaps if one added the cost of the Iraq war at about $100B per year (outside the running DOD budget I’ve heard), your true cost of gasoline from just our military efforts would triple to around $1.50 per gallon.

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