CALIFORNIA’S FUEL PRICES WILL INCREASE
An effort in the California legislature to postpone the inclusion of vehicle fuels in the Cap-and-Trade program was killed by Senate President Pro Tem Darryl Steinberg (D). Therefore, the program will go forward on January 1, 2015, as will our fuel prices.
Fuel refineries in the state (remember California has a unique blend of fuel that is only refined in California) will have to purchase carbon credits from the Cap-and-Trade market to offset their emissions. In turn, they will pass along this increased cost to the distributors, who will pass along to the retailers, who will pass along to the consumer.
It is estimated the initial increase will be $0.13-$0.18 per gallon. The cost in the short and long term will depend upon the cost of carbon credits.
California’s Cap and Trade program, which is the buying of selling of pollution credits, will increase the price of gas and diesel in the state by $0.15/gallon starting next year. Those who created the plan see the increase as “unintended” while those of us who understand how business works saw it coming a mile away.
Read Richard Coyle’s, President Devine Intermodal, op’ed in the Sacramento Bee. Click here.
Oh, and did we mention, 25% of all Cap and Trade monies collected will go to build high-speed rail. Forget about our dilapidated roads and bridges…who needs goods movement anyway?
CAP-AND-TRADE AND FUEL PRICES AND YOU
Come January 1, 2015 expect fuel prices in California to rise by $0.15/ gallon, and therefore the price of everything else you consume will increase as well.
Why, you ask? Because that’s when California’s cap-and-trade regulations take effect. Fuel refiners will have to buy credits (i.e., pay a tax) to off-set their emissions. The total “tax” to be paid by the oil companies is expected to be $3.6B/year. They will, of course, increase their prices to the distributors, who will increase their prices to retailers, who will increase their prices to consumers.
Why doesn’t California source its fuel from other states, you ask? Because California has a special formula of fuel that is only required in this state. It is not cost effective for producers in other states to reconfigure their lines to refine our boutique brand of gas and diesel and then ship into the state.
How is the money collected via the cap-and-trade tax going to be spent, you ask? The state expects to collect $9B/year in taxes and have earmarked 20% of that amount to subsidize a high speed rail project.