The price of petrol

Petrol Prices

In this Feb. 15, 2012 photograph, Chevron gas prices are displayed in Modesto, Calif. Gasoline prices have never been higher at this time of year. At a national average of $3.51 a gallon, gas is up 23 percent since Jan. 1. (Picture from LA Times: AP Photo/The Modesto Bee, Debbie Noda)

[Postscript: I wrote this article last week and with all the numbers in my mind I commented on a BBC site about petrol prices. I was called up and asked to speak on Radio 5’s late night ‘Let’s have a heated debate‘ programme and speak in favour of increasing petrol prices: surprisingly they were having trouble getting people to volunteer. I was extremely nervous and managed to say a couple of sentences trying to appear less mad than other people who had been lined up to support petrol price rises, but I am not sure I managed. Anyway, if it happens to you: my advice is to say ‘No’! I was later called and questioned by a BBC journalist who wrote this.]

Browsing the LA Times I noticed that petrol(gasoline) prices are causing pain in the USA, and I wondered just what happens when petrol prices rise. Do we drive less? Do we trade in inefficient cars and buy smaller models? Or do we just complain and hope someone will lower the price. Thinking about these questions, I wrote a spreadsheet (Link here) to help me think. And I would like to share three calculations with you.

1. What is the equivalent cost in pence per litre of gasoline at $4/gallon?

  • 1 US Gallon is equal to 3.785 litres
  • 1$ is worth approximately 62.5 pence (at £1 = $1.6)

So putting these together we find that $4/US gallon = 250 pence/3.785 litres which is 66 p/litre – roughly half the cost in the UK!

2. Does it make economic sense to buy a new car? I worked out the cost of travelling 10,000 miles a year which corresponds to travelling just 23 miles to work on 220 working days. Many people travel much further. As an extreme example, let’s compare Car A which gives 30 miles per gallon (mpg) with Car B that gives 60 mpg.

  • At £1.20/litre, Car A costs 19 pence per mile and  Car B costs 9.5 pence per mile.

So one would save 9.5 pence for every mile driven, or £940 per year. To me that doesn’t seem like quite enough of an incentive to invest, say, £10k in a car.

3. Does it make  ecological sense to buy a new carConsidering only carbon dioxide emissions, the calculation no longer depends on the price of fuel, but the type of fuel does make a difference. Diesel fuel has longer hydrocarbon molecules than petrol, with more carbon-carbon bonds and so has a higher energy density. Burning 1 litre of diesel emits 2.6 kg of CO2 while burning 1 litre of petrol (gasoline) emits 2.3 kg of CO2.

  • If Car A is a petrol car  it would emit 3.5 tonnes of CO2 per year and if Car B is a diesel, then it would emit 2.0 tonnes of CO2 per year

Wow! That is a reduction of 1.5 tonnes of CO2 per year, and that really seems like it would be worthwhile saving!

Putting these three calculations together we see the problem: Even though UK fuel prices are twice the level of prices in the US, they are still not high enough to allow people to make rational economic decisions that also make ecological sense.

Of course I have ignored many factors, including the carbon embodied in the manufacture of a car. The Guardian tells me that the Citroen C1 has 6 tonnes of embodied CO2, The Ford Mondeo has 17 tonnes of embodied CO2, the Landrover Discovery has 35 tonnes of embodied CO2. Looking at the prices of the base models in each of these ranges (£7,000, £18,000, £34,000) it seems that the base model price correlates with amount of embodied carbon:

  • Each tonne of embodied carbon adds about £1,000 to cost of the base model of the car.

Surely that can’t be a coincidence!?

The spread sheet is an .xslx file and can be downloaded here

Advertisements

4 Responses to “The price of petrol”

  1. Suzanne Says:

    To answer one of your questions, Michael – yes, people do start driving less for economic reasons. See the chart here for the effect of both the recession and high gas prices in the U.S.:

    http://www.fhwa.dot.gov/policyinformation/travel_monitoring/11dectvt/figure1.cfm

    Gas prices here went through a peak in 2008, then dropped way down. They’ve been rising ever since, but even so there was a resurgence of both driving and SUV buying in 2010, when people thought things were back to ‘normal’. Luckily, gas prices have risen again.

    Suzanne

    • protonsforbreakfast Says:

      Thanks Suzanne: That’s a great graph – and very telling. I don’t know whether to be shocked by the linear increase of a factor of nearly 2 since 1986 or the change of slope in 2008. Either way it shows that changes in habits do follow affordability – personally I would have liked to see a more graceful peak and decline as we slowly adopted new ways of working and living.

      All the best

      Michael

  2. Emma Says:

    About your “each £1000 adds a tonne” – I suspect that’s exactly how they worked out the numbers! I recently filled in a “climate impact calculator”, and for energy used and transport it gave precise conversion factors (whether they were also accurate, I do not know!). However, for “other goods and services” it said:

    “Greenhouse gases are emitted in the production and distribution of the goods that your meeting buys, […]. They are also emitted through the services that you buy, […]. It is very difficult to work out these emissions. As a very rough estimate, each £ spent results in the emission of about 0.5 kg of CO2, on average”.

    Whoever did the calculation on the cars obviously used a conversion factor twice that for a similar “back of the envelope calculation”.

    • protonsforbreakfast Says:

      Yes, Dave Lowe mentioned that possibility as well. I did do the calculation where one assumes that the entire costs of a car are energy costs, and then imagines that (say) energy costs £0.03 per kWh in bulk and then there is 0.5 kg of CO2 associated with with each kWh. This comes out to be a very large number for each car, so I guess cars are not constructed out of pure energy!

      Have a nice weekend

      M

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: