Ezra Klein does the math:
For all the complexity of calculating the true cost of oil...it’s unclear that it matters as much as some might think. I assumed that a world in which gasoline’s total costs were present at the pump would be a world in which our consumption was radically different. But almost all of the experts I spoke to said that wasn’t true. If an energy source as dirty as coal had to pay its true cost, we’d likely stop using it. But, disasters aside, that’s not the case with oil.
Years of regulation and innovation have made us better at finding, extracting, refining, and using oil. Oil might be cheap compared to its true costs, but adding those costs in wouldn’t make it unaffordable. That gets to the bigger issue, which is that energy sources are only cheap or expensive relative to one another. And the anchor beneath our reliance on oil is that, at this point, there’s nothing to replace it.