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Bet you don't know: the cost of a gallon of gas in your area

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How much is the cost of a gallon of gas in your area?

I'm fully prepared to wager that you don't know, not even if you just returned from filling your tank this morning. Currently I'm in the Sacramento area where the per gallon prices range from $2.97.9 to above $3.15.9.

But . . . I did not ask what the "price" per gallon was, did I? I asked what the "cost" per gallon was, and you don't know that, do you? No one does. And there's a very important reason that no one does. The reason owes to what are known in economics as externalities; a cost that is not conveyed through the pricing mechanism by elements of a society that did not agree to whatever actions may have been the cause of the cost. Relative to cost, those components that add to it as externalities are called "negative externalities." There are a lot of them in a gallon of gasoline, and you ought to be at least as aware of what they are, as you are of the price you shell out at the pump; not the specific increments, but at least what's in there that you don't see.

You need to know this stuff, because it affects even the most personal aspects of your life; the education of your children, any unemployment safety net you may need, that sort of stuff; all of which owes to another principle: whether it's you, or the company you work for, or some government entity, the same dollar cannot be spent twice.

The federal expense budget consists of two major categories: discretionary and non-discretionary spending. Non-discretionary spending -- principle and interest payments on the national debt, already contracted for debt such as veterans benefits, Social Security payments, etc. -- cannot be adjusted by either the executive branch or congress. Discretionary spending, by definition, is that part of the budget where the picking and choosing as to what and how much to what is negotiated. Within the broad "discretionary" category is the component that much, too much of our government and population likes regard as the only component that is not subject to negotiation, that everything within the defense budget is somehow beyond consideration.

What this epistle asks is why defense expenditures are somehow sacrosanct, beyond examination? I'm not presuming that whatever Secretary Gates and the rest of the Obama team, or any future executive, might postulate as an appropriate sum for the defense of the country is not fully justified. But, damn it, as it's either us or our progeny who will be picking up the tab, we've an inherent moral right to know what's in there, and why.

Let me give you an example. For the sake of discussion, let's suppose you're remodeling your kitchen. On the basis of reputation, you've selected your general contractor, you've told him (or her) what you'd like done, and now await only the bid. $57,696.48! Your eyes pop. So, you examine the bid, for what's included. For what's included, maybe $57,696.48 is very reasonable. Now the task to you becomes whittling the what you'd like to have but don't really need from the what's included bid.

Defense Secretary Robert Gates this morning (July 15) announced his department quickly needed $33 BILLION, just to "stay afloat." Of course, Dr. Gates is working from a set of presumptions he was assigned by the president and the congress. And to meet the assignment, perhaps that number, just as was the case with our kitchen remodeling bid, is perfectly reasonable. The difficult challenge that we, as the electorate that will, in one way or another have to pay the tab, must now demand of both the executive and legislative branches is that they do some serious whittling.

I'm borrowing Gates' "afloat" term because it segues well into aNew York Times on-line op-ed by Timothy Egan, "Run Silent. Run Deep. Run Obsolete."
(Clickhere)
Egan's article notes that the U.S. yet maintains the 65-year old MAD (Mutually Assured Destruction) policy that, as we have the capacity to literally annihilate any nation state contemplating hurtling nuclear ICBMs at us, they won't even contemplate it. To this end, he points out, we currently have more than a dozen Trident-class nuclear powered submarines, each of which is armed with sufficient nuclear weaponry to accomplish that nation-state annihilation! But then Egan goes on to include in "Run Silent" the fact the U.S. is building more Trident-class subs, each of which will have a $8.2 BILLION price tag. The context he iterates is this: "What we will get for those billions are sleek new nuclear-armed behemoths to replace the sleek old nuclear-armed behemoths, all in service to a dinosaur policy. Once the subs are in use, they will likely perform the same tired mission, ready to fire the last shot in a world going down. Meanwhile, above the surface of the ocean, crazed religious leaders in tents and Flintstone huts plot murder against innocents using Radio Shack rejects."

Let's get back to that externalities thing, and the cost of every gallon of gas. However the approved and signed into law 2010 defense budget was $680 BILLION, by authoritative reckoning, because so much of the Iraq-Afghanistan wars have and to some extent remain funded on "emergency supplementals," the real defense costs rage from $880 BILLION to $1.03 TRILLION! (Clickhere) This unintelligible sum exceeds the combined sum of what every other country on earth spends on defense, as well as the percentage of GDP that any other country devotes to defense spending. At this point I'd like you to take a quick glance back to the last sentence I quoted from Egan's article.

From David Walker to other economic experts who have testified before congress, the unfunded costs of Iraq-Afghanistan (long-term veteran benefits, replacement costs for equipment that has been ground to unrepairability by the grit and gusts and heavier than intended or designed for use in the inhospitable climes) are close to busting the $3 TRILLION mark.

Oh yeah . . . the externalities! The costs of virtually every military effort in the Middle East -- and extending now to Afghanistan -- is a consequence of the oil that region has. (Oil is a fungible commodity, which translates as: it doesn't matter the percentage we derive specifically from that region, it all goes into the same world pot, from which we derive 100 percent of that commodity.) How much, approximately, of that "externality" then must we add to that per gallon price at the pump, to determine the real cost per gallon we or our progeny will have to pay?

I am not one of those naive folks who believe we can trim foolishly, or eliminate altogether, what we spend on defense. The world today is as it has always been for those seeking to exist civilly, a very dangerous place. I'm absolutely unwilling to turn the other cheek. Rather, I take the position proffered by Sean Connery's Jim Malone to Kevin Costner's Eliot Ness, in Brian De Palma's 1987 "The Untouchables": "You wanna know how to get Capone? They pull a knife, you pull a gun. He sends one of yours to the hospital, you send one of his to the morgue. That's the Chicago way!"
The issue that provokes me, however, and that I'm raising here, was raised in congress recently by an eclectic group in the House that included Barney Frank, Democrat of Massachusetts, Walter Jones, Republican of North Carolina, and Ron Paul, Republican of Texas. All wanted to know why the U.S. felt itself obligated to be the world's policeman, and to subsidize the budgets of countries around the world by providing more of their defense, spending a greater portion of our GDP, to the detriment of the overwhelming majority of Americans, than those other countries were spending on their own defense. Frank pondered which nation was likely to attack the Netherlands, for example, and why we should be worried about defending them, in any case. "If they feel threatened, let them spend their own money to defend themselves."

Founder and ex-CEO of eBay, Meg Whitman, is running to be the next Republican governor of California. In her ads, Meg says she wants to "lower taxes and trim the waste from the state budget." Ms. Whitman does not specify either what taxes and by what amounts she would cut them, when the state is now billions and billions in the hole, nor what she defines as "waste" that she would eliminate. Currently in California, bridge tolls have been increased 20%, communities have cut or eliminated or outsourced entirely emergency first responder staffs, school districts are closing schools, cutting class hours and days, eliminating summer school programs, laying off teachers and support staff, and the safety net programs for those who've been laid off and have lost their medical insurance coverage have been shredded. I recently spent more than a month in San Rafael, just north of the Golden Gate Bridge. That community was having bake sales and book sales, just to try to keep its single library open.

I don't know the sum of the externalities that are within the cost of that gallon of gas, as a consequence of the defense budget, and I'm unwilling to entertain idiotic WAG (Wild A** Guess) comments from anyone else, as to that or what percentage we can cut from the defense budget. What I know is that we must insist the administration and congress take a hard look at it, and begin whittling . . . seriously. The average American is hurting, even if that hurting is an emotional anxiety he or she is near the precipice. As with the average American, the Department of Defense cannot have, and should not expect to have, all it would like to have. Nor is all it would like to have necessary to the actual defense of this country.

 

An "Old Army Vet" and liberal, qua liberal, with a passion for open inquiry in a neverending quest for truth unpoisoned by religious superstitions. Per Voltaire: "He who can lead you to believe an absurdity can lead you to commit an atrocity."

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Because you can't spend the same dollar twice, wha... by Ed Tubbs on Thursday, Jul 15, 2010 at 4:05:30 PM
"Frank pondered which nation was likely to attack ... by bradysbeau on Thursday, Jul 15, 2010 at 5:03:37 PM
Oh deary me, gosh No ! 3 BUCKS U.S. plus for a GAL... by Eddy Schmid on Friday, Jul 16, 2010 at 10:16:24 AM
It makes my mind spin, on the one hand I find myse... by Ed Tubbs on Friday, Jul 16, 2010 at 10:55:54 AM