A Simple Reality Check

I work in a downtown Phoenix office building, where the city’s air pollution is the worst, and every afternoon I get up from my desk to take a 15-minute walk. I usually hike the several stories of our parking garage in order to stay out of the sun. I often pass by the parked cars of my coworkers. Sometimes I like to write “WASH ME” with my finger in the grime on the back windows of their vehicles. It makes the end of my finger filthy black.

I had another air pollution reminder after we had a couple of days of rare rainy weather last week. The air was so clean that I found it remarkable how clearly I could see the surrounding mountains. It reminded me that it had been that way for thousands of years before mankind started generating energy by burning fossil fuels.

Modern urban dwellers have become so used to air pollution that we’ve practically forgotten how bad it is, and what it’s doing to us and our planet. That makes it easier for the corporate oligopolies, and the politicians they control, to distract us from the fact that one of our primary goals should be putting an end to air pollution as soon as possible.

Are Fossil Fuels Morally Praiseworthy?

smokestacks
(Wikipedia)

Alex Epstein, the president and founder of a for-profit think-tank called the Center for Industrial Progress, claims he’s seeking to bring about a “new industrial revolution.” The manifesto on his organization’s website claims that, “For the last 40 years, so-called environmentalists have held back industrial progress around the world.”

Epstein also wrote a book titled the The Moral Case for Fossil Fuels wherein he claimed that all recent human progress is the result of the availability of cheap energy generated by fossil fuels. He backs up his theory with statistics showing how the quality of life for people across the globe has dramatically improved in the last couple of centuries – all because economies were powered by fossil fuels.

His clever argument is flawed, however, because he didn’t factor in all of the external costs created by the production of fossil fuel energy. They include respiratory and heart diseases, cancer, mercury contamination in lake waters,  acidification of the oceans, depletion and contamination of groundwater aquifers, mountaintop removals, coal miner deaths, crude oil spills, poisonous coal ash spills, destruction of wildlife habitat, and wars in the Middle East. And, of course, there are the enormous problems being caused by climate change.

The environmental regulations that are being imposed by the federal government on the companies that generate energy from fossil fuels are an attempt to internalize these costs by requiring these companies to include them in their retail energy prices, thereby making the prices more accurate and our energy markets more efficient. Therefore, complaints that enactment of these regulations would raise energy prices aren’t true, because these costs are already spread throughout the nation’s economy, instead of being internalized in fossil fuel energy prices – as they should be.

 

New EPA Rules Will Not Increase The True Cost of Gas

oil well
Oil Well (Wikipedia)

The Environmental Protection Agency (EPA) recently released new rules that require oil refineries to reduce the amount of sulfur in the gasoline they produce to no more than 10 parts per million by 2017. This is the limit that’s already been set in California, Japan, South Korea and Europe. The purpose of the reduction is to improve the respiratory health of Americans through cleaner air.

In addition to public health professionals, the new rules were welcomed by automakers. Carmakers were pleased because they will no longer have to build one type of a vehicle for those places where the limits are already in effect, plus another type that can use the dirtier gas that’s sold elsewhere. The cleaner gas would also make it easier for them to produce cars with fewer overall emissions.

The American Petroleum Institute, of course, complained about the new regulations. They claimed that the rules will result in an increase of six to nine cents per gallon of gasoline, and that they weren’t given enough time to implement them.

The EPA, however, said that the new standards would add less than a penny to the price of a gallon of gas, and California officials pointed out that it added less than a penny to the price when they implemented this stricter standard in their state 11 years ago.

But even if the new rules would really add nine more cents per gallon to the price of gas at the pump, is that truly an increase in the price of gasoline? The EPA estimates the rules will help avoid up to 2,000 premature deaths and 50,000 cases of respiratory ailments in children per year, saving $6.7 billion to $19 billion annually in health care costs. The overall economic effect of the new rules would be to internalize these costs into the retail price of gas. Including these costs in the price of gasoline doesn’t increase its real price; it makes the retail price of gas a truer price.

These new regulations, like most environmental regulations, make the market more efficient by requiring that the total costs of production be included in a product’s retail price.

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