Keith, I am sure you are then very aware the results and conclusions all of analyses are largely based on the numerous assumptions used in the analytics of the ‘full-lifecycle’ impacts of well-to-consumption/use of the petroleum oil and other energy sources. Assuming the total ‘external benefits’ are fully covered in the purchase price of fossil fuels is a classic example where an assumption has been made, but the quality of that assumption may not be very accurate.
Market prices are normally determined by the costs to produce and deliver a given fuel, customer demand or willingness to pay for that fuel, and, including the minimum profit margin acceptable to the producers-refiners-suppliers. In the case of motor vehicle fuels, if the full value was accurately reflected in the market price then the cost of all equivalent motor fuels should be about the same, right? However, using data from 2010 for example, and assuming fuel mileage is proportional to the fuel’s heat content (a very reasonable assumption based on the performance of flex fuel light duty vehicles) then the cost of gasoline, ethanol and LPG (propane) per million Btu’s should be essentially the same. However, the data shows in 2010 that gasoline cost $17.81, ethanol $23.46 and LPG $13.28 per million Btu’s; over a $10 spread-range. These data don’t support the assumption that the value or benefits of hydrocarbons are anywhere near being equal to the market-purchase price.
Another fact that some fail to understand or include in their analyses is that the cost of nearly all petroleum fuels do include some level of the ‘external costs’ also. What I am referring to is the cost to restore the environments/lands used for in-situ and ex-situ crude oil production, and the costs to produce ‘cleaner’ petroleum fuels (lower sulfur, aromatics, metals, etc.). These costs are normally distributed and fully covered in the final petroleum oil market cost to all customers.
Next the debate becomes the impacts of carbon dioxide and other greenhouse gases. This debate should begin with clarifying the probability or statistical significance of the numerous, once again, assumptions used to develop these very rough ‘external cost’ impact projections & estimates.