Tag Archives: oil spill

The true cost of gasoline

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The New York Times’ oil map now includes a close-up of the landfall area around the Gulf Coast.

In Sunday’s Washington Post, Ezra Klein provides some much-needed context as to the true cost of oil, and in turn the gasoline we buy to power our cars.  The key part is framing the overall cost in terms of externalities:

Most of us would call the BP spill a tragedy. Ask an economist what it is, however, and you’ll hear a different word: “externality.” An externality is a cost that’s not paid by the person, or people, using the good that creates the cost. The BP spill is going to cost fishermen, it’s going to cost the gulf’s ecosystem, and it’s going to cost the region’s tourism industry. But that cost won’t be paid by the people who wanted that oil for their cars. It’ll fall on taxpayers, on Gulf Coast residents who need new jobs, on the poisoned wildlife on the seafloor.

That means the gasoline you’re buying at the pump is — stick with me here — too cheap. The price you pay is less than the product’s true cost. A lot less, actually. And it’s not just catastrophic spills and dramatic disruptions in the Middle East that add to the price. Gasoline has so many hidden costs that there’s a cottage industry devoted to tallying them up. At least the ones that can be tallied up.

Klein lists pollution, congestion, the need for our military to secure oil reserves, and citing some other research from Ian Parry at RFF, he concludes the premium is $1.65 per gallon of gas – which put on top of the current average cost per gallon of $2.72, would mean we’d need $4.37 gas to cover the true costs – a number Klein notes is almost certainly an underestimate.  However, Klein notes that while higher gas prices would certainly curb some driving (and data suggests this to be true), the larger move over the past decades has been the entrenchment of our auto-dependence, and thus our gasoline dependence.

The key to reducing use is to provide alternatives:

That gets to the bigger issue, which is that energy sources are cheap or expensive only in relation to one another. And the heaviest anchor beneath our reliance on oil is that, at this point, there’s nothing to replace it with.

“We’re pretty much stuck with our dependency on oil,” Parry says. “We don’t have any substitutes. Even if we hugely increase the price on oil, we’d only have limited impact on it. People need to drive and get to work.”

In urban situations, reducing oil use means reducing driving.  A key part of that equation would be to provide more alternative transportation modes. If we were to raise the price of oil via an increase in the gas tax, that revenue could be used directly to build those new transportation infrastructures – internalizing the externality.

In other urban, externality pricing schemes, linking the revenue generated from the tax to a tangible benefit for users is the key to gaining political support.  Donald Shoup talks extensively about funneling parking revenue to parking benefit districts; polls in New York suggested that dedication of congestion pricing revenue to transit improvements was the key to securing popular support (if not legislative support). Linking revenues to the tax is a key part of helping people understand the value of the virtuous cycle – no matter how counter-intuitive it might be.

Intersection density & centrality

What is the best method to quantify what makes a place walkable?  The Journal of the American Planning Association recently published some powerful documentation from Robert Cervero and Reid Ewing on the value of pedestrian-oriented design (following up on yesterday’s links).  Grist has the article (hat tip to Planetizen), citing Laurence Aurbach’s PedShed blog – again, the “Three D’s” or urbanism emerge front and center – density, diversity, and design:

Their findings? Of all the built environment measurements, intersection density has the largest effect on walking — more than population density, distance to a store, distance to a transit stop, or jobs within one mile. Intersection density also has large effects on transit use and the amount of driving. The authors comment,

This is surprising, given the emphasis in the qualitative literature on density and diversity, and the relatively limited attention paid to design.

In other words, intersection density is the most important factor for walking and one of the most important factors for increasing transit use and reducing miles driven, but gets relatively little attention in research and in public policy.

In other words, the other two D’s (density and diversity) get more play than design.  Perhaps that’s because density and diversity (of land use, of people, of incomes, etc) were easier to quantify than something as seemingly subjective as design.

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Kaid Benfield ties these principles to those angry about the ever expanding oil slick in the Gulf of Mexico, hitting on another theme of the research – location:

The study’s key conclusion is that destination accessibility is by far the most important land use factor in determining a household or person’s amount of driving.  To explain, ‘destination accessibility’ is a technical term that describes a given location’s distance from common trip destinations (and origins).  It almost always favors central locations within a region; the closer a house, neighborhood or office is to downtown, the better its accessibility and the lower its rate of driving.  The authors found that such locations can be almost as significant in reducing driving rates as other significant factors (e.g., neighborhood density, mixed land use, street design) combined.

The clear implication is that, to enable lifestyles with reduced driving, oil consumption and associated emissions, environmentalists should continue to stress opportunities for revitalization and redevelopment in centrally located neighborhoods.  As Ewing and Cervero put it:  ‘Almost any development in a central location is likely to generate less automobile travel than the best-designed, compact, mixed-use development in a remote location.’

Aurbach is quick to note the limitations of the study, but even with those this is an exciting quantification and potential metric for walkable and sustainable design.  It builds off the Jacobs legacy of ‘short blocks’ and adds some science behind recent GGW posts from Erik Bootsma and Daniel Narin on the variety and histories of street grids.  This kind of research lends weight to the anecdotal accounts of Portland’s small blocks resulting from the belief that corner lots were more valuable, as well as ideas of better utilization of alley space – such as this recent post from Richard Layman.

NYT Infographics – VMT and Oil

Two great infographics from the New York Times – both related to petroleum.

First, a great graph of per capita VMT compared to changes in gas prices:

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Putting vehicle miles traveled per capita along the x-axis instead of time makes the swings in both price and VMT more obvious. The massive growth of VMT over time despite the swings in prices shows just how entrenched car culture and automobility are in the US.

All that VMT must need a lot of oil. The Times also has a handy map of the Coast Guard’s forecasts for the extent of the growing oil slick in the Gulf of Mexico.

April 22:

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April 28:

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May 1:

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May 4:

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