Pending gas price hikes make California lawmakers skittish
As the California Legislature wraps up its last few weeks of this year’s session, some lawmakers are anxious to head off a scheduled gas price increase set to take effect next January under the state’s cap-and-trade program.
Responding to pleas from consumer groups and the oil industry, Assemblyman Henry Perea, D-Fresno, has put forth A.B. 69, which would postpone for three years the requirement to purchase permits for transportation fuels. Perea says he supports the cap-and-trade emissions-reduction program overall, but noted in a statement that a report he commissioned from the Legislative Analyst’s Office found that significant hikes in gas prices would hurt average Californians.
“There is widespread agreement that including transportation fuels in the cap-and-trade program will increase the retail price of gasoline,” Perea said.
The rules stem back, ultimately, to A.B. 32, passed by the Legislature in 2006, which called on the California Air Resources Board to reduce the state’s greenhouse gas emissions. Under an executive order originally signed by former Gov. Arnold Schwarzenegger, fuel producers will be required to decrease carbon intensity across the board by 10 percent by 2020. Part of that order calls for a low-carbon fuel standard, which is estimated to increase gas prices by 15 cents per gallon.
Polling released last month by the Public Policy Institute of California found that Californians still broadly support A.B. 32, particularly regulations to limit or ban off-shore drilling, the building of nuclear power plants or hydraulic fracturing. The poll even finds that 76 percent of Californians favor the law’s requirement that the state’s oil companies either produce lower emissions transportation fuels or buy offsets. But that support drops to 39 percent if the result is higher fuel prices.
Californians already pay some of the highest gas prices in the nation. Further restrictions to the energy industry would naturally result in those regulations hitting the average Californian’s wallet. Naturally, lawmakers fret that the impending price hikes will further cripple the state’s poor, putting yet another burden on their economic recovery.
But is it fair to exclude one segment of the energy industry from cap-and-trade when others have been complying since 2012? The utilities industry, among others, argue it is time oil companies be held to the same standards. Recently, a group of 32 members of the state Senate and Assembly wrote to Gov. Jerry Brown warning that:
A fundamental redesign of A.B. 32 that allows oil companies to play by different rules than other industries would not only unacceptably delay action to reduce climate pollution, but could also disadvantage those industries that have already made investments to comply with the law.
California has always struggled to find the balance of environmental protection and economic prosperity. If the cap-and-trade rules are implemented and gas prices shoot up significantly, it will be incumbent on the Legislature to explore alternatives to cut the cost of living in California for all residents.