Why? In a recent Treehugger post, Merchant explains that we're “underpaying for goods that have hidden costs every day.” His reasoning rests upon the economic concept of the externality, an “effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account.”
Merchant uses Ezra Klein’s recent Washington Post piece on how externalities factor into the Gulf spill as a jumping off point for his argument. Klein writes that the costs of the oil spill of will fall on fishermen, the tourism industry, “Gulf Coast residents who need new jobs,” and “on the poisoned wildlife on the seafloor.” Meanwhile, those who wanted the oil for their cars in the first place will evade its costs for the most part. And unfortunately, as Merchant argues, the hidden costs of oil brought to the surface by the BP Gulf spill just skim the surface:
[Negative externalities] are present every day, not just in the event of a disaster. They include the aforementioned cost of air pollution, the cost of waging geopolitical campaigns to secure reserves in foreign lands, the cost of exacerbating climate change, the cost of regular seepage and environmental contamination, and so on.
Klein cites one policy expert who says that if you tally up only the quantifiable externalities we aren't paying in the gas price, and add them in, the true cost would be around $1.65 more a gallon. Since gas prices have been hovering just below $3, that means that we should all be paying closer to $5 a gallon -- though Klein himself admits that this probably low balls the true number.
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To read more on the uphill battle to reign in the negative externalities of oil, check out Treehugger.
Photo via Wired via Treehugger
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