Terry Tamminen - who was a until recently the head of the California Environmental Protection Agency and a member of Governor Arnold Schwarzenegger's cabinet - says fuel prices do not include ''externalities'', such as the effects on public health, congestion, even wars to secure foreign oilfields.

''If people were paying the true price at the pump, in the US, it would about $10 a gallon, instead of $3,'' said Mr Tamminen, who will address an NRMA conference in Sydney today on alternative fuels.

If Mr Tamminen's calculation applied to Australia - where one gallon is the equivalent of 3.8 litres - petrol prices would rise from about $1.20 a litre to $3.60.

''We are bearing this cost now, just not at the pump,'' he said. ''Our taxes are higher because of healthcare costs related to lung disease and asthma, the damage to crops and plants that are stunted, environmental clean-up and in the cost of defending oil around the globe, which is not on any company balance sheet [because] the taxpayers pay for that.''

The US Defence Department has revealed that $100 billion is spent every year deploying troops to defend oil interests around the world, not including the Iraq war, which has so far cost $1 trillion.

As Mr Schwarzenegger's environment tsar, Mr Tamminen oversaw the US's toughest vehicle emission laws, which the Obama administration adopted as a national standard.

Even if governments and consumers question the broader costs of oil dependence, Mr Tamminen says they cannot ignore one sobering fact: ''We are going to run out of oil.''