Gas prices are at record highs for Americans — but in a just world, they’d be even higher

On Tuesday, Joe Biden announced a US ban on Russian oil imports. In making the announcement, he asked the American people to do something they’re not often asked to do by re-election-obsessed politicians: make a personal sacrifice now for the greater good of the future — and humanity.

“The decision today is not without cost to your home — Putin’s war is already hurting American families at the gas pump,” Biden said. “If we do not respond to Putin’s assault on global peace and stability today, the cost of freedom and to the American people will be even greater tomorrow.”

This is how we should all think about energy policy. Because, yes, as of Tuesday, Americans are paying a near-record average of $4.173 per gallon at the pump. But in a just world, with good leadership and equitable climate policy, we would be paying way, way more for it.

Indeed, the high prices US consumers are facing are not indicative of some troubling future, but rather an invitation for Americans to join the reality of the present, where many European countries pay three times more for gas, and experts suggest prices should go even higher to encourage a transition away from fossil fuels.

A combination of short-term factors have sent gasoline prices soaring in the US, from a collapse in consumer demand and production capacity during the pandemic, to OPEC limiting oil flows, to the international isolation of Russia, the world’s second-biggest crude oil exporter. But even as some Americans in states like California pay $6 a gallon, this price still pales in comparison to an accurate accounting of fossil fuels’ impact on the planet.

As Ian Parry, an environmental policy expert at the International Monetary Fund, told NPR in October, “The prices of fossil fuels should reflect not only the costs of producing those fuels but also the environmental costs — the carbon emissions which contribute to global climate change and emissions, which cause local air pollution, which elevate the risks of heart and strokes and lung disease for people that are exposed to that air pollution.”

Research from his team has found that under-pricing of gasoline is “pervasive” compared to its true environmental and health costs. The nearly $6 trillion in subsidies the fossil fuel industry got in 2020 were a major factor in this disconnect. We all pay for the damage wrought by fossil fuels, even though they’re cheap at the gas station.

A truly efficient gas price could help reduce global CO2 levels by over a third, keep the planet under 1.5 degrees of warming, raise revenues equivalent to 3.8 percent of global GDP, and stop nearly a billion air pollution deaths per year, the IMF has found. Such a strategy would probably double or even triple the price of gasoline.

As of now, US policy towards gas prices remains confused at best. In 2021, the Biden administration joined 19 other countries committing to end fossil fuel subsidies abroad. A year later, the White House and top Democrats are mulling suspending gas taxes for the rest of the year. At some point, we must choose between cheap fuel and a habitable planet.

Of course, even if policymakers acknowledged that transportation is the leading cause of US greenhouse emissions and decided to make prices reflect that, any gasoline policy should be tailored to keep the poor from bearing the brunt of the cost. They already face the worst impacts of the climate crisis, despite contributing to the emission of greenhouse gases the least. They shouldn’t pay for the wealthy’s climate myopia at the pump on top of all that.

A reality-based gasoline price, likely achieved through higher taxes on consumers or producers, could fund individual tax benefits to the poor. Or it could fund society-wide improvements, like green infrastructure and public transit, that would level the playing field, as Harvard’s Jeffrey Frankel has argued.

US federal gas taxes haven’t increased since 1993. They no longer generate enough money to even maintain US infrastructure — their original goal — and other nations often pay nearly four times more taxes on gasoline.

Only skillful and impassioned leadership will be able to sell most people on paying more for gas as a way for us all to pay less for the impact of fossil fuels. Ukraine is instructive here once again. Gas prices are politically as well as economically volatile, and often track closely with presidential approval ratings. But the Ukraine crisis shows that some issues transcend politics and even economics.

A Wall Street Journal poll on Tuesday found that 79 percent of Americans favoured the ban on Russian oil, even if it sends gas prices up. If people saw the moral urgency and human devastation of climate change the same way they saw it in Ukraine, perhaps majorities would get behind ditching fossil fuels.

Until then, Americans will be paying bargain prices at the gas pump for their own destruction down the line.