A new paper estimates the massive damages from leaded gasoline (which is still around).
In my free time I really like reading about the history of pollutants. While PM2.5 and CO2 are the “sexy” pollutants people seem to study these days, the story behind lead in gasoline is by far the craziest. It has all the elements of a good environmental crime story: An ingenious inventor. A profit-seeking company trying to hide the negative health consequences. Wild economic success. And a heroic regulator, saving humankind from the massive negative health consequences.
It all started with Thomas Midgley, an engineer at General Motors, who later went on to become the president of the American Chemical Society. He invented not only one, but two of the most damaging industrial compounds of the past century: he created CFC (chlorinated fluorocarbon), which is the stuff in hairsprays and foams that came close to destroying the ozone layer, and he also figured out that Tetraethyllead could be added to gasoline, which prevented “knocking” in internal combustion engines. Both substances were cheap and became ubiquitous quickly. In the case of lead, GM and Standard Oil started a company called “Ethyl Gasoline Corporation”, which soon held the patent on the fuel additive and whose business goal was to sell it far and wide.
At the same time it was known that lead was a powerful neurotoxin. As Beth Gardiner discusses in her awesome book “Choked”, a physiologist at Yale had tested lead as a possible nerve agent during the first World War. When asked about adding it to gasoline by GM, she responded that, “Widespread lead poisoning was almost certainly to result.” The companies standing to profit from Tetraethyllead started a “science smear campaign”, similar to the ones used by others in the case of cigarettes and today in the context of climate change. It’s the classic, attack science publicly using studies Ethyl had supported or commissioned, all with the goal of stating that the negative consequences were exaggerated. They pursued a global marketing campaign ensuring governments across the world that the additive was safe. The Surgeon General in the US signed off on the additive. Wow. And hence, even the orange VW Beetle I grew up in was fueled by leaded gasoline, spewing the stuff into the environment.
Leaded gasoline ran into trouble when the catalytic converter arrived. It became clear that it would not function with leaded gasoline. The 1970 Clean Air Act required significant improvements in air quality and the transportation sector was a major target. Catalytic converters had to become part of the solution and that meant the end for leaded gasoline in personal cars. An epic battle between the EPA and the corporations behind Ethyl ensued. The EPA won (yay for the good guys!). The EPA implemented a set of performance standards designed to decrease the content of lead in gasoline from 1.1 grams per gallon in 1983 to 0.1 grams per gallon in 1986 and finally an almost complete ban in 1996. A very cool paper by colleagues at Resources for the Future shows how quickly lead mostly disappeared from our lives. It is, however, still allowed in motor racing and aviation at 0.05 grams per gallon.
The leaded gasoline phaseout has been one of the most effective and at the same time understudied aspects of the Clean Air Act. As an economist, I would like to ask what the benefits of this regulation were. A new paper by Alex Hollingsworth and Ivan Rudik, presented at the NBER meetings in Cambridge last week, helps shed light on this important question. They do something very clever. They exploit the fact that two major racing organizations, the National Association for Stock Car Auto Racing (NASCAR) and the Automobile Racing Club of America (ARCA), switched from leaded to unleaded gasoline in 2007. Should we care about car races? They argue we should! One three- hour race emits more lead than the annual emissions of the average airport in an entire year. And you thought the bacon cheeseburger with fries consumed at the race was the worst thing you were doing to your health. How about a burger with a side of lead?
They use a so-called difference-in-differences design (which essentially compares changes in a number of outcome variables before and after the phaseout in communities with and without races) to show the impact of lead emissions on ambient concentrations, accumulation in the blood and impacts on mortality. They show credible and sizable causal effects of lead on these outcomes! Races with leaded gasoline resulted in higher ambient lead levels, higher concentrations of lead in the blood of children and higher elderly mortality. This is the first causal evidence of this link, which is amazing given that there has essentially not been any lead in your gas since the late 1980s! Science moves slowly.
So what are their numbers? They estimate “that the reduction in annual lead emissions from deleading NASCAR and ARCA races yielded social benefits of $1,800 per child near these through avoided IQ reductions and $2.2 billion per year from avoided premature elderly mortality.”
Those are some massively big numbers! Let me put these in perspective. The authors do not do that, since they are careful and have to satisfy blood thirsty referees at journals. The worry is that the functional form of the relationship they estimate is not a straight line, but nonlinear. Which means if that is the case, what I am about to do is not an accurate calculation. But I am not doing an official benefit cost analysis. I am writing a blog and wanted to know an order of magnitude. So let’s get that back of a napkin out (a napkin has two backs. American English idioms are strange). The authors show that the social cost of a gram of lead in gasoline in their setting is $1100. I am going to be crazy and apply that number to every gram of lead in gasoline in the US in 1985. Let’s be conservative and call mid 1980s consumption 250 million gallons per day and assume that each gallon contained 0.5 grams (the allowed maximum in 1985). Do some math, pray it ain’t wrong and get…a whopping 151 billion dollars a year in the cost of the lead emitted! This is a massively big number!
If you are a card carrying member of the nonlinearity police, I can give you another more conservative estimate, which the authors mentioned in their talk. If you look at the valuation of all NASCAR teams and add them up, the lead emitted from NASCAR races does more damage in terms of their mortality estimates in a year than the value of all teams combined. A really critical voice could argue that NASCAR racing may have a net negative impact on human well being (depending on how good NASCAR is at price discrimination and hence leaving consumer surplus on the table). Or in more subtle Berkeley style language, it’s probably not making the world a better place. So at the very least, if you are teaching environmental economics and need a good example of a large externality, you’re welcome.
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Suggested citation: Auffhammer, Maximilian. “The Crazy History of Lead in Gasoline.” Energy Institute Blog, UC Berkeley, March 2, 2020, https://energyathaas.wordpress.com/2020/03/02/the-crazy-history-of-lead-in-gasoline/
Maximilian Auffhammer is the George Pardee Professor of International Sustainable Development at the University of California Berkeley. His fields of expertise are environmental and energy economics, with a specific focus on the impacts and regulation of climate change and air pollution.