Californians Deserve To Hear More From Sacramento on Cap and Trade Expansion

Catherine Reheis-Boyd
President of the Western States Petroleum Association

It is good to hear a public dialogue is occurring on the vast expansion of California’s cap-and-trade system coming January 1, 2015, when gasoline and diesel used by millions of consumers and businesses will be regulated for the first time under the state’s cap and trade program.

According to economic analysis by the California Air Resources Board (CARB), this expansion of cap and trade will increase gasoline prices by as little as 4 percent and as much as 19 percent.  With gasoline prices currently averaging around $4 a gallon, that is a price impact of 16 cents to 76 cents.

The Western States Petroleum Association has long supported California’s clean air goals and believes a well-designed market based system is the most effective way to reduce overall greenhouse gas emissions.  Our members’ refineries have been regulated under the state’s cap and trade program for stationary sources since 2012 and have been paying hundreds of millions dollars into that program each year.

The expansion to transportation fuels, however, is a significant departure from the current cap-and-trade program, both in terms of costs and impacts to businesses, consumes and the economy at large. This expansion will be the first time anywhere in the world that gasoline and diesel sales have been regulated under a cap and trade system.

Because California is entering uncharted territory, WSPA has been expressing concern for some time that California has done nothing to educate consumers and businesses that will be impacted by the fuel prices increases CARB says will result from this program.

More recently, we have grown even more concerned public statements by representatives of CARB, the agency responsible for managing the cap and trade program, seem contradictory and, in some cases, unclear. Last week, I sent a letter to CARB Chair Mary Nichols asking that the statements CARB has been making be clarified through the news media and elsewhere.  (You can read my letter here.)

It’s time for a serious discussion about this regulation and whether or not it best meets California’s environmental and economic goals. And it’s time the State provide Californians accurate information about this program and its impact on the price of gasoline and diesel.

Assemblymember Henry Perea (D-Fresno) has introduced new legislation (Assembly Bill 69) that would provide policymakers additional time to conduct a thorough impact analysis of placing fuels under the cap, inform the public and devise protections for consumers – as has been done for other aspects of the cap-and-trade program. Such protections are especially important for low-income families and small businesses that can least afford additional costs.

It’s time to close the communication gap.

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