Yesterday, on this site we ran a column by Joel Kotkin saying that the fight over the types of energy sources will have a profound effect on national elections in November. While California is certainly involved in that larger picture, the actual cost of energy will be a focus in California as well. With cap-and-trade fees threatening to boost energy costs, threats of oil taxes, a fight over oil and gas drilling by hydraulic fracturing in this state and the general increase of gasoline prices from multiple causes, the cost of energy is swiftly rising up the political issues ladder.
Whether the energy costs are a determinate in California elections is uncertain but the potential is certainly there.
One big reason that it is unclear whether the energy cost issue will take hold in November’s election is because a big piece — the threat of extending cap and trade requirements to transportation fuels — will not be felt until January, after the election is over. Even if voters are told that cost increase is coming down the track, will the voters take it seriously without actually experiencing the increases?
Here’s betting they just might if the cost of gasoline keeps rising.
Already 16 Democratic assembly members have signed a letter to the Air Resources Board and the governor seeking a delay in extending the cap and trade to fuels. They fear many of their constituents and small businesses will suffer under the burden of new fuel costs. Indeed, the Air Resources Board’s economic impact analysis has projected a minimum 16 cents per gallon increase based on the market price of carbon credits with others projecting that cost increase could be much more.
An increase in fuel costs will filter through the economy and certainly boost the price of goods that are transported throughout the state.
SB 1017 is a proposal for an oil severance tax. While oil severance tax proposals have been defeated in the past they keep coming with the potential of adding more cost to California fuel prices. All the oil drilled in this state stays here which means that an oil severance tax would add to the cost of California fuel already among the highest taxed and the highest gasoline prices in the continental U.S.
A possibility of decreasing oil costs by increasing supply through increased production especially by the process known as fracking, a drilling method that uses high pressure water and chemicals to extract oil and natural gas from rock formations, meets constant threats of bans and moratoriums from some state and local government officials.
Decreased supply, increased taxes and cap and trade cost adjustments potentially create a body blow to the California economy and jobs market.
There is little that will get voters’ attention more quickly than $5.00 a gallon gasoline and higher.