The price of petrol

I read an interesting fact about the price of petrol. I don’t what the price of petrol there is right now, but in 2007 Americans could buy a gallon of gas for $3. However, that price only includes the costs to the oil companies – the costs of exploration, pumping, refining and distribution – plus, of course, a margin for profit. That leaves out most of the real cost of petrol – the tax breaks, the enormous direct subsidies we pay these (fabulously rich) companies, the massive military costs of ‘protecting’ our access to oil fields, and of course the massive and growing environmental costs.

The International Center for Technology Assessment has calculated that, taken together, these additional factors total something like an extra $12 per gallon.

Now, it does seem very likely that a major part of making the transition to a more sustainable lifestyle will depend on making consumers pay the real costs of what they consume. So is anyone going to ask Americans to pay $15 a gallon for petrol? I doubt it, and not just because of the average American politician’s supine attitude to car culture, oil companies and all the other enthusiasts for mass environmental collapse. The real problem is much more serious than that.

Geographically speaking, Americans are very spread out. Leaving aside the fact that there are literally thousands of miles between the principle business and industrial centres on the East and West Coasts, Chicago and Texas, most Americans rely on their cars for an enormous range of practical purposes. There is more space and far less public transport than in Europe or Japan, so even if every American were suddenly smitten by a desire to get on a bus tomorrow, there probably wouldn’t be one to get on.

So if petrol cost Americans $15 a gallon, so many people would be literally unable to move – go to work, shop, or even move to a geographically more sustainable location - that the American economy would collapse - and with it much of the world’s economy too. Add to that the effect of making consumers pay four times as much for everything else they use oil for, and the end would be in sight for American society. We Europeans wouldn’t be far behind.

And if that happens, it would not significantly reduce the environmental damage we do. Much of that is a) embedded in things we have already made, whether or not we use them; and b) built into infrastructure such as power stations that will not stop operating just because we are poor.

On the other hand, it certainly would remove the primary instrument we have for solving the problem, which is the economy itself. Not only would a massive depression remove the economic surplus we need to make long-term investments in environmental solutions but it would so panic us that we would start to adopt short-term solutions that were environmentally catastrophic. So no, a recession would not be a good thing for the environment.

Most of the economic alternatives are little cheerier. Even a degree of economic direction through instruments such as tax and regulation are not credible so long as we continue to treat economic activity as primary and economic motives such as profit as sacrosanct. Yet the option of not accounting for the real cost of our high-energy, disposable lifestyles is also rapidly slipping off the table.

Finally – and perhaps the greatest impediment of all – our existing economic system has no way of managing any such transition. The way companies are organised and the mechanisms whereby capital moves through the system (essentially, directed solely by opportunities for short- and medium-term profit) mean that planning for a long-term transition is out of the question. It is not that we could not manipulate the structure of markets, and so of prices and profits, in the right direction; it is rather that the resistance to this from the existing economic powers – global corporations in particular – would be so great that it is scarcely likely to work in the very limited time we have available.

In short, there is no straightforwardly economic solution to the crushing economic problem our environmental position confronts us with.

Which leaves only one option: a political solution.

That is not to say, a ‘political’ solution of the usual kind we apply to the rest of the world. The rich cannot cut themselves off in a comfortably affluent cocoon, but neither can they force the world into submission. The extent and intensity of globalisation makes any such idea laughable. Even the American military, it turns out, can barely down a single Middle Eastern nation we spent a decade starving into submission before we threw everything we had at it. Even together with Europe, Russian and Japan’s unqualified support, it is improbable in the extreme that we could force the rest of the world to pay for our continuing excesses.

So ‘business as usual’ is not an option, not even temporarily.

As far as I can see, we need a progressive (and very rapid) transition towards two goals – the protection of society as the transition is made, and a long-term sustainable energy position. It is likely that this will have to include capitalist business, and it will be interesting to see how we manage to keep that particular genie in its box – because it will not want to stay there.