20 March 2009

True Pricing ~ A Gallon of Gasoline's Real Costs

While surfing Wikipedia about Amtrak and inter-city rail transit generally, I found the term "Recovery" which turns out to mean the "Farebox Recovery Ratio of a passenger transportation system: the proportion of the amount of revenue generated through fares by its paying customers as a fraction of the cost of its total operating expenses." But why does such a seemingly prudent, energy efficient, and pleasingly comfortable transportation mode as passenger rail require such subsidies? The answer seems to be the lack of True Pricing in other modes. If the total Real Costs of building roads, subsidizing automobiles, and guzzling gasoline were actually and properly accounted for -- and charged to the beneficiaries -- then the situation would be rather different. This means Internalizing Externalities -- so-called "side-effects" like pollution currently dumped into the environment at no cost, or costs borne equally by everyone thus unfairly including non-users. The particular case of Gasoline is fascinating...
"A study by the International Center for Technology Assessment found that after accounting for government subsidies, pollution cleanup and other costs, the real price of gasoline is estimated to be somewhere between US$5.60 and US$15.37 per gallon. Were gasoline sold within this range of prices, people might voluntarily drive less, choose more fuel-efficient vehicles, and use mass transit."

1 comment:

Unknown said...

Right you are. And the implications of not correcting for these externalities continue to expand. Building sprawled housing/retail/commercial infrastructure based on poorly priced travel demand, means that we will experience those un-attributed costs for the life of that infrastructure.

Here is another link I just found that gives more numbers about all this: