Saturday, May 21, 2011

Gas and energy prices too high? Well, they're actually a lot higher than you think

David Leonhardt at the New York Times quotes Michael Greenstone and Adam Looney, economists at The Hamilton Project on the costs of American energy policy. They argue in a new study:
… our energy choices are based on the visible costs that appear on utility bills and at the gas pump. This system masks the social costs arising from those energy choices, including shorter lives, higher health care expenses, a changing climate, and weakened national security.
 Leonhardt further comments:
Mr. Greenstone and Mr. Looney estimate that a coal plant must spend 3.2 cents to produce a kilowatt hour of electricity (and consumers then pay slightly more than this). This price appears to be a bargain, the economists write, but the true costs (of our carbon energy) — once health costs, military costs and the like are taken into account — are more than twice as high: 8.8 cents per kilowatt hour.
Real costs of current energy consumption must be factored into any strategy for funding research and creating viable markets for green energy.  When people complain about things like gas prices at the pump, they're not even close to understanding the actual costs involved in our energy markets.