This article tells the story of the externalities associated with trucking in China, which is their most heavily used mode of freight transportation. As mentioned in class today, trucks in China burn diesel ful with 130 times the amount of sulfur than diesel in America. Since the Chinese government forces diesel prices to remain low (often lower than the costs of refining), refining companies like Sinopec buy the cheapest possible crude oil which happens to be the most sulfur-rich as well. The obvious solution to this would be to increase the price of diesel for the truckers, but the PRC is hesitant to do this as it would put many of the small trucking companies out of business. Another issue with trucking is that while emissions standards are increasing for new trucks, old inefficient trucks are left on the roads. The government is hesitant to ban old trucks, again, for the same reason - they do not want to slow down the economy.
Ironically, those facing the worst of the damage - truckers, who breathe the thick black clouds of diesel exhaust for their job - are the ones who do not want the industry to change: “That would be too much for me, I would be put out of business. I might as well stay home.”
Full article here: http://www.nytimes.com/2007/12/08/world/asia/08trucks.html?_r=1&pagewanted=all