The blow-out (explosion and collapse) of the Deepwater Horizon drilling rig and the well 5,000 feet below has brought into high contrast a serious problem inherent in the way we produce energy: we have long refused to calculate the real costs of extracting fossil fuels. Ecological economics is founded on this point: we should calculate the value of the natural ecosystem services disrupted by the after-effects of carbon emissions.

But we now have a clear view of another deficiency in the market economics of oil production: BP did not adequately plan for the eventuality of a catastrophic blow-out and region-wide spill. By not adequately calculating that risk, BP was not able to take as seriously the absolute obligation to ensure the safety and security of its drilling rig at the Deepwater Horizon site. Even now, there is speculation BP still views the potential oil wealth of the failed well to be more valuable to the firm than curbing the catastrophic economic and environmental fallout from the spill.

As David Leonhardt wrote in last week’s New York Times magazine, “The people running BP did a dreadful job of estimating the true chances of events that seemed unlikely — and may even have been unlikely — but that would bring enormous costs.” Leonhardt also points out that this is a generally human quality, the inability to adequately measure the costs of low-probability high-cost events before they occur.

This is why they seem like the rare “black swan”, which changes our thinking about probability and expectation in fundamental ways. The Deepwater Horizon disaster is one of these low-probability high-cost events that was not unforeseeable but whose remoteness made it easy to avoid thinking about, until it happened. Now that we have met the black swan, we can evaluate its true cost and we can plan better.

We need to assess what the real long-term planning costs are, given the obviously inadequate state of the technology needed to address a catastrophic well failure like the Deepwater Horizon blow-out, and how can any enterprise plan to finance such risk? (BP, it must be remembered, lost $17 billion in stock value yesterday alone, and is now reported to be contemplating bankruptcy.)

On the true cost of using gasoline, or of the erosion of natural ecosystem services, Lester Brown’s landmark book Eco-Economy put it as follows:

Economic decisionmakers at all levels – corporate planners, government leaders, investment bankers, and individual consumers – all rely on market signals. But the market often does not tell the truth. For example, when we buy a gallon of gasoline, we pay the costs of producing gasoline, but not the health care costs of those who suffer from the polluted air, the acid rain damage, or the costs of climate disruption from burning the gasoline.

Sometimes we learn of the market’s shortcomings the hard way. For example, by 1998, China’s Yangtze River basin had lost 85 percent of its original forest cover. Partly as a result, flooding of the Yangtze River basin that year displaced 120 million people and caused $30 billion worth of damage. In response, Chinese officials banned tree cutting in the upper reaches of the basin. Trees standing, they argued, were worth three times as much as trees cut.

Without the diffusion of costs by way of tax credits and special breaks to oil companies, including the long-term socio-politically coordinated effort to address environmental degradation and public health costs resulting from fossil fuel use, a gallon of gasoline would cost something in excess of $12.