Today, for Earth Day, I found myself reflecting on an increasingly common complaint I hear: the high price of gasoline. I’m going way outside my lane for this post since I’m far from an expert on the environment. Furthermore, it’s hypocritical of me to criticize the gas consumption of others—although we do own one all-electric vehicle, we also own a gas-powered SUV. Every time I fill it up, I wince a little—both at the impact I’m having on the planet and at the price of gas, which has exceeded $6/gallon in most of California.

That said… I believe the price of gas in America is too low.

This is a slightly contrarian view, but the logic that leads me to this conclusion is fairly simple:

The second greatest existential threat to humanity (Putin is busy reminding us of the first) is global warming, driven by the burning of fossil fuels. (Note: If you disagree with this fact, go read something else.)
Gas-powered automobiles contribute nearly a third of greenhouse gas emissions.
If the consumption of something (gas) is causing an enormous cost (climate change), then the cost of that thing should be higher to encourage conservation and alternatives.

This is hardly a revolutionary idea. In fact, it’s Economics 101—if you want the demand for something to decline, make the price of it higher. Yet, in America, cheap gas is regarded as a God-given right, as if it was written into the Constitution. In spite of the environmental benefits of reduced gas consumption via higher prices at the tank, allowing the price of gas to increase is fraught with peril.

First, our economy depends on it. When fuel prices rise, the price of everything in America rises—fuel-hungry airplane tickets go up, the cost of food which must be transported to market goes up, the convenient delivery of Amazon Prime items to your home through a fleet of vehicles goes up. Inflation is at its highest level in two decades largely as a result of increased fuel prices. And higher inflation leads to higher interest rates, which means higher prices for anything that requires a loan—from financing a house, to buying a car, to paying off your credit card debt. Whether you drive a Hummer, a Prius, or ride the bus, we all feel the pain of high fuel prices in our carbon-based economy.

Gas prices at my local Chevron station in Menlo Park, CA.

Second, high gas prices are a political third rail. Nothing agitates American voters like paying more at the pump. It remains to be seen if the Biden Administration’s legacy will more closely resemble the Clinton Administration and Obama Administration, or the Carter Administration. You can be sure the Republicans will bludgeon every Democrat from the President to the county coroner with the issue. You would think both parties could agree that we need to be energy independent and kick the habit of cheap gas. But U.S. foreign policy has arguably been the opposite for the last century—fighting wars to sustain cheap fuel while enabling up the most ardently anti-democratic dictators, from Putin to Maduro and MBS to Khamenei. The list of the top oil-producing nations is a who’s who of autocratic regimes, nearly the exact inverse of the Democracy Index and the zones of greatest global conflict—exacting an incalculable cost in both dollars and human lives.

The third and perhaps most challenging societal cost of high fuel prices is that they are a regressive tax. High gas prices are simply less impactful on people living in densely populated urban areas with mass transit alternatives and white-collar jobs that can be done from home with no commute. People in less affluent rural areas, often living there to avoid high housing costs, really suffer when gas prices rise. They have long commutes and are more likely to have gas-intensive occupations, such as transportation and agriculture.

But the bottom line is that if we really want to slow global warming, achieve energy independence, and help foster democracy around the world, the cost of gasoline and other fossil fuels must be higher. Even at $6/gallon, the price of gas in America remains well below fuel prices in most of the industrialized world. The price of this scarce and destructive resource must more closely reflect its true costs. Although some offsets and governmental incentives will be necessary as we ween ourselves from a carbon-based economy, we need to use the laws of economics to hasten the transition to sustainable energy and benefit of our environment.

In the meantime, I won't be complaining anymore about the price of gas.

Gassed: The Costs of a Carbon-Based Economy