Category Archives: Climate Change

Why Can’t Someone Calculate the True Price of Gasoline?

Blog by Bill Luyties (OWOE Founder and Editor): Over the past few weeks, I’ve had multiple articles pop up on my news feeds that proclaim that an EV can cost as much to drive per mile as an ICE vehicle. These all appear to be based on an Anderson Economic Group report titled: Real World Cost of Fueling EVs and ICE Vehicles (2nd Edition), dated April 2022 but apparently not issued until early 2023. One article headline actually shouts: Shocking study finds EVs cost more to fuel than gas cars in late 2022. While I generally feel that the Anderson study did a good job of trying to compare costs, the authors of these news articles ignore most of the study and focus on a single headline-grabbing finding that for mid-priced cars EVs cost about the same as ICE cars when charged at home, but cost more when using commercial chargers (see Figure 1). This may well be true today, but the Anderson study and these articles miss the real point – such a comparison is misleading and almost totally irrelevant for a number of key reasons.

Figure 1 – Cost of fueling EV and ICE vehicles (Anderson, 2022)

This study, and every other one like it ignores the full cost of burning a gallon of gas.

What is the true cost? The price one pays at the pump at the neighborhood Shell station is not the true cost of a gallon of gasoline. It is missing a number of key elements that are not visible to the consumer and yet cost the consumer eventually. Costs that are not included:

  • Social Cost of Carbon (SCC) which attempts to account for the impact of greenhouse gas emissions on society and the environment, including global average temperature, sea level rise, energy consumption, and agriculture. The EPA, in its September 2022 report: Report on the Social Cost of Greenhouse Gases, concluded that the median cost for year 2020 ranged between $110 and $370 per metric ton of carbon dioxide emitted for a variety of analytical models and input assumptions. We can convert this to a cost per gallon of gas using the fact that gasoline contains 5.5 lbs of carbon per gallon, which would produce 20 lbs of carbon dioxide per gallon when burned; then adding another 2.75 lbs per gallon for emissions associated with crude oil production, transportation and refining per a 2018 Stanford University report (10.3 grams of emissions for every megajoule of crude); which gives a total of 22.75 lbs carbon dioxide per gallon. Using the average mileage rating for a light duty vehicle of 25 mpg, the SCC values range from $4.50 to $15.1 per 100 miles driven.
  • Including this SCC cost would increase the numbers in Figure 1 for mid-priced ICE cars from $10.34 per 100 miles to between $14.84 and $25.44 per 100 miles, i.e., both greater than the “mostly commercial charging” value for EVs. Also, note that the SCC cost ranges from $1.13 to $3.78 per gallon, as compared to the average cost of regular gasoline across the US in 2021 used by Anderson as $3.32 per gallon.
  • It should be noted that the EPA report does not account for a number of social costs that would increase these numbers, including: impact from changes in precipitation, extreme weather events, impact on livestock and fisheries, impact on tourism, impact on biodiversity, displacement and migration, etc.
  • Tax breaks and other subsidies that the fossil fuel industry has enjoyed for decades and that are funded by taxpayers, estimated at $20 billion annually in the US, although some of this can be considered offset by current government subsidies for EV technology.
  • Cost of drilling related environmental disasters, such as the 2010 BP Horizon disaster that cost BP $65 billion to address. Oil companies attempt to recover as much of these expenses possible from consumers by raising gasoline prices. However, this is not necessarily possible due to the fact that oil is a commodity with price set predominantly by worldwide supply and demand. Much, if not all, of such costs will be borne by shareholders and insurance companies.
  • Cost of pipeline spills such as the Keystone Pipeline’s 2022 major spill that cost $480 million to clean up. Similar to the above, much of these costs are likely to be paid for by shareholders and insurance companies.
  • Cost of natural disasters such as the current Alberta wildfires. A recent study claims to link about 37 percent of the total area burned in the Western U.S. and Southwest Canada since 1986 to the heat-trapping emissions released by the world’s 88 largest fossil fuel and cement producers.
  • Cost to plug all 130,000 abandoned oil and gas wells across the US, which has been estimated by the US Department of the Interior will cost between $3 and $19 billion. Some of this cost will be carried by the oil companies, but a significant portion may need taxpayer funding given that many of the responsible companies are no longer in business.

One must also keep in mind that the technology associated with EVs is evolving rapidly and will also change the overall picture in favor of EVs. Whereas ICE technology is well over 100 years old and at the stage where only incremental improvements are likely, EV technology is rapidly advancing. Over the next several years, the industry is likely to see significant changes that will continue to reduce cost and other perceived shortcomings of EVs:

  • Reductions in battery weight and cost.
  • Increase in battery capacity (vehicle range).
  • Reductions in charging times.
  • Increase in charging options, both home and away, which will address costs identified in the Anderson report as deadhead miles cost (purple bars).

Etc., etc…The magnitude of these unaccounted-for costs and evolving technology make any such ICE vs EV comparison ridiculous. If one were to ignore everything else, including only the SCC cost in the comparison, the headline for these articles would be more like: “Boring study shows that EVs cost less to drive than gas cars and are much better for the environment.” But such articles don’t get attention and online clicks.

Don’t Blame the Suppliers, Unless They Are Big Oil

Bill Luyties, OWOE Founder and Technical Editor: Last year OWOE published a blog titled “Don’t Blame the Suppliers. It was intended to help focus the narrative related to climate change from attacks on the supply side of the contributors to climate change, i.e., the big oil companies, to the demand side, i.e., consumers who want big cars and to buy lots of everything. However, since that time I have come across several articles published by the BBC: one published in 2020 titled “How the oil industry made us doubt climate change” and another published earlier this year titled “The audacious PR plot that seeded doubt about climate change“. These articles document the efforts of the fossil fuel companies to engage in a public-relations campaign to sow doubt in the science of climate change by following the playbook of the tobacco industry from several decades earlier. Thus, I would like to update the title of that blog to “Don’t Blame the Suppliers, Unless They Are Big Oil”.

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A real NIMBY problem

OWOE Staff: The battle against climate change is not going well. President Biden’s climate agenda has fallen apart. Russia’s war in Ukraine and its fallout within Europe has led to an increase in coal power and a push to increase world oil output. Germany is proceeding with plans to shut down its last 3 nuclear power plants in December which will eliminate 6% of its annual electricity generation and 11% of its non-fossil based generation. World oil production which peaked in 2019 at 99.7 million barrels per day before the Covid pandemic slashed demand has risen back almost to pre-pandemic levels and is expected to exceed those levels in 2023. We can all lament those factors as lost opportunities, but there are two factors driving Americans’ behavior that make OWOE seriously question whether any real progress can be made. We call them NIMBYism and IWINYism. We will address NIMBYism, or the Not in My Back Yard syndrome, here and cover IWINYism, or the I Want it Now or Yesterday syndrome, in a future post.

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Time for a New Energy Policy

OWOE Staff: It’s a new year, we have a new president and administration, and we have new hope that the plan to vaccinate Americans is going to finally end the pandemic. What we don’t have is new thinking on what this country should be doing for a long term, rational and strategic energy policy. OWOE believes it is the right time to propose a comprehensive energy policy that balances America’s needs with the planet’s needs and is based on sound economics, realistic technology and good common sense. The OWOE energy policy combines several key elements, including: firm commitment to dramatically reduce dependence on fossil fuels in a planned and rational manner, sustainable investment in renewable technologies, and establishment of a North American Energy Alliance (NAEA) between the US and Canada to aggressively develop and globally sell our existing energy resources.

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The fundamental (and somewhat existential) source of climate change – and how we might overcome it

With the news that this past July was the hottest month on earth since record keeping 140 years ago, satellite images of the Amazon and State of California burning, the most powerful hurricane ever measured in the Atlantic Ocean east of Florida, carbon dioxide emissions to the atmosphere rising again to near record levels after a brief leveling, and Swedish teenager Greta Thunberg’s stirring call to action while staring down both Donald Trump and Vladimir Putin, climate change has been a hot topic in 2019. While the scientific community remains nearly 100% aligned that global warming is driven by the burning of fossil fuels, a relatively small, yet powerful, group of naysayers fights the science. Who are these very powerful people, and why do they fight? One common characteristic – they are mostly baby boomers = the generation of Americans with an insatiable appetite for consumption and a strong resistance to change.

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Don’t get too worked up over the President’s actions against the environment

Every week seems to bring another attack by the Trump Administration against laws and regulations that have been instituted by prior administrations to protect the environment and fight climate change. The most recent is the campaign to deny California the right to set stricter automobile emissions standards than federal limits. It has caused yet another uproar among environmentalists and liberals and glee among climate change deniers and conservatives and will undoubtedly lead to many years of legal battles. But what is reality? In fact, this move, and all the others, are just meaningless actions that do little more than pander to the Administration’s fossil fuel campaign contributors and excite the hardcore Republican base ahead of the upcoming elections. The reality is that technology and market forces are driving the world inexorably and at an increasing pace toward a renewable energy future, despite the last-ditch efforts of the President and his supporters. Let’s look at some of the higher profile actions.

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Do Renewable Portfolio Standards Increase Electricity Rates?

I live in California. That gives me a front seat to virtually every new initiative and trend related to saving the planet, whether it is about turtles and plastic straws, banning single-use plastic bags, electric vehicles, or green energy. Although not the first state to adopt a Renewable Portfolio Standard (RPS), California has been one of the most aggressive in its timetable for replacing fossil fuel based electricity with carbon-free. In 2018, California updated its RPS to the requirement to achieve 60% of electricity sales from renewable sources by 2030 and 100% by 2045. Of course, California’s aggressive push toward renewables has triggered a wide range of reactions. For example, Michael Shellenberger of Environmental Progress has been pushing the idea that California’s electricity rates are significantly higher than the rest of the US (see Figure 1) and rising significantly faster because of its dependence on renewables. His culprit is renewable energy and his solution is to keep nuclear plants open. In contrast, Roger Sowell, who blogs about renewable energy issues, argues that California’s unique climate, geography, and large population make such differences to be expected.

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