On Pollution, the Difference Between Cost and Price

Evan Manvel

“Science has spoken. There is no ambiguity in their message. Leaders must act. Time is not on our side.” - Ban Ki-moon

The Oregonian's editorial board continues its bumbling assault on Oregon's effort to fight pollution, this time through a misleading equating of cost and price.

Today's editorial attacks the effort to make Oregon's fuels cleaner, arguing it will raise costs of "everything else people do with their cars."

While the assertion that prices (what the O calls costs) will go up is questionable, the statement misses the basic difference between something's price and its cost. Roughly, the price is the amount of money exchanged for a good. The cost is what it takes to produce a particular product or service - a calculation that needs to include externalized costs, costs imposed on those outside of the transaction.

The clean fuels standard would mean some costs that have been externalized become internalized. That is, the polluter, who previously imposed costs on others by polluting, pays for his or her pollution (or avoids that cost through polluting less). If one believes in the power of market signals, it's the sort of effort that needs to be applauded. While The Oregonian argues the clean fuels standard would subsidize some, in fact we're currently subsidizing polluters.

The editorial further tries to quantify what having clean fuels will cost Oregonians, while ignoring how global warming, if unchecked, will deeply harm our economy and personal well-being, as well as resulting in millions of deaths across the globe. And it continues its absurd Zeno's Paradox argument, as if global warming, a problem created by millions of decisions and policies, can only be addressed with a single, planet-sized silver bullet, instead of many policies and jurisdictions doing their parts.

This all comes on the heels of the starkest warning yet by the world's scientists on the urgency of addressing global warming. From The New York Times:

“Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems,” the report found.

In the starkest language it has ever used, the expert panel made clear how far society remains from having any serious policy to limit global warming.

The earth's atmosphere will change, oblivious to The Oregonian editorial board's sloppy claptrap and amateur economics. As we know, Mother Nature bats last - and doesn't give a hoot about what anyone says about such things. Secretary General Ban Ki-moon said,

“Science has spoken. There is no ambiguity in their message,” Mr. Ban said. “Leaders must act. Time is not on our side.”


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