Summary
A carbon price of $100 per ton of CO2 would raise gasoline (petrol) prices by approximately $0.80 to $0.89 per gallon ($0.21 to $0.23 per liter). The range depends on the effect of oil market forces.
Longer explanation
Based purely on the carbon content of oil, a carbon price of $100 per ton of CO2 would raise gasoline prices by approximately $0.89 per gallon ($0.23 per liter), since burning one gallon of gasoline emits about 8.887 kg of CO2 (or 0.008887 tons) (EPA, 2022).
However, more complex dynamics drive the price of gasoline and other fuels in the energy market. Energy prices change to balance out differences in supply and demand. When a carbon price or tax raises fuel costs for producers, they might pass some of those costs to consumers. But as prices rise, people tend to use less energy, which lowers demand. In response, energy producers may reduce prices. This balancing effect means that while fuel prices go up due to the tax, the overall increase felt by consumers is somewhat reduced.
In En-ROADS, the “Market Price of Oil” graph illustrates this effect. For example, in 2035, with a $100/ton CO2 carbon price, the market price of oil (the pink line) is about $111/barrel, compared to $77/barrel (the dotted pink line) without any carbon price. This $34/barrel difference translates to an increase of around $0.80 per gallon ($0.21 per liter).
