Fuel Prices Are High But the True Cost of Filling Your Tank Is Higher

So much of it is hidden and paid for by everyone, not just the drivers.

Black and white photo of an old gas sign when gas was 9 gallons for $1.
Gas prices were once 9 gallons for a buck.

Archive Photos / Getty Images

Fuel is expensive but the true cost of filling our tanks is higher than the already soaring prices. James Horrox, a policy analyst at the Frontier Group, recently wrote "Counting the Hidden Cost of Driving," noting this very point: Even with the high price of gas these days, it doesn't come close to what it should cost if it included the full gamut of environmental, health, and social costs of driving. We've discussed this a number of times at Treehugger, but Horrox adds some new numbers to the mix.

Vehicle Crashes

"Every year, on average, almost 40,000 Americans are killed in vehicle crashes, and millions more hospitalized with serious injuries. In addition to the incalculable human cost, crashes take a major financial toll: the National Safety Council estimates that in 2020, the financial cost of vehicle-related deaths, along with injuries and property damage, totaled almost half a trillion dollars."

Horrox notes this is conservative, doesn't include "quality of life valuations," and should be doubled. We looked at this on Treehugger and found the quality-adjusted life year (QALY) value alone was worth $594 billion per year. This should absolutely be considered, as "the impact on the lives of crash victims can involve extended or even lifelong impairment or physical pain, which can interfere with or prevent even the most basic living functions."

We keep talking about the 40,000 people killed, but in 2018, 2,710,000 people suffered non-fatal injuries. The majority are drivers, but there were 75,000 pedestrians and 47,000 bicyclists injured.

Air Pollution

Horrox quotes research blaming pollution from transportation for 58,000 per year, which is bigger than crashes. He thinks that is underestimated as well, putting the damages at between $10.7 billion to $41.6 billion per year. Why killing 50% more people than crashes has damages one-tenth of the dollar value is not explained; it seems low.

In my now-archived post about the subject, I quoted World Bank about small-particulate pollution (PM2.5 or fine particles less than 2.5 millionths of a meter) alone causing "184,000 deaths globally," adding: "This includes 91,000 deaths from ischemic heart disease, 59,000 deaths from stroke, and an additional 34,000 deaths due to lower respiratory infections, chronic obstructive pulmonary disease (CoPD), and lung cancer combined."

Climate Change

Here, Horrox puts a price on the 1,373 million metric tons of carbon dioxide emissions from gasoline and diesel burned in a year and multiplies it by the "social cost of carbon" of $51 per ton, totaling $70 billion. But this again seems light; $51 is a number that goes back to the Obama administration. Other studies have the cost of carbon all over the map, with a median value of $417 per metric ton. One outlier study puts it at $100,000 per ton. But let's take that median and suddenly we are up to $572 billion and we are talking about real money.

Noise Pollution

This is one I have never put a value to, but Horrox notes there are serious costs due to its health effects. He doesn't list an estimated cost in the U.S. but a European estimate of $43 billion a year. I believe American cars are bigger and louder, and there are more of them.

Horrox calls this "the tip of the iceberg" not including costs of congestion, disposal, road salt, and "the military and geopolitical costs of oil dependency," which are off the scale. We have noted a few others on Treehugger, including the cost of policing and the cost of sprawl.

The Cost of Policing

Legal historian Sarah A. Seo wrote in her book, "Policing the Open Road," that the police as we know them today developed with the automobile. "In the span of a century, towns and cities throughout the country—and not just in metropolitan centers—expanded their forces and professionalized beat cops, turning them into 'law enforcement officers,'" writes Seo. In a previous post, I calculated that this adds another $34.5 billion.

The Cost of Sprawl

Then there is also the cost of sprawl. Roads are mostly "free to use, but they aren’t cheap to build or maintain." The fuel taxes and license fees don't begin to cover the costs, and the subsidies for road transport are greater than that for all other forms of transport combined. Todd Litman of Canada's Victoria Transport Policy Institute did a study of it and concluded "that sprawl imposes more than $400 billion dollars in external costs and $625 billion in internal costs annually in the U.S."

What's the True Cost of Gasoline?

A Time article looked at some of these issues and determined that gas should cost $3 more per gallon but it didn't include a fraction of the numbers discussed here, where we are talking trillions of dollars. Much depends on where you set that price of carbon. But no matter where you put it, the price of gas is clearly way too cheap.

View Article Sources
  1. Horrox, James, "Counting the hidden cost of driving." Frontier Group, 19 Apr. 2022.

  2. "The Economic and Societal Impact of Motor Vehicle Crashes, 2010 (Revised)." U.S. Department of Transportation, 2015.

  3. Grover, Amy, "Non-Fatal Car Accident Statistics in America." Injury Claim Coach, 2021.

  4. Tiwari, Geetam and Dinesh Mohan, editors. "Transport Planning and Traffic Safety." CRC Press, 2016.

  5. Samuel, Sigal. "We've been radically underestimating the true cost of our carbon footprint." Vox, 4 Sept. 2021.

  6. Ricke, Katharine, et al. "Country-level social cost of carbon." Nature Climate Change, vol. 8, p. 895-900, Sept. 2018. doi:10.1038/s41558-018-0282-y

  7. Lerner, Louise. "Climate change will ultimately cost humanity $100,000 per ton of carbon, scientists estimate." UChicago News, 9 Sept. 2020.

  8. Seo, Sarah A. "Policing the Open Road." Harvard University Press, 2019.

  9. Litman, Todd. "Analysis of Public Policies That Unintentionally Encourage and Subsidize Urban Sprawl." The New Climate Economy: Working Papers, 2015.