Why are California lawmakers worried about increased fuel costs?

By Keith Goble, Land Line state legislative editor | Wednesday, July 16, 2014

A group of California state lawmakers are pushing to delay putting fuels under the state’s cap-and-trade program.

The program has been in place since 2006 through passage of AB32 – the California Global Warming Solutions Act. The program allows the California Air Resources Board to cap greenhouse gas emissions and require companies to buy permits to exceed those caps.

Currently, the cap applies to power plants and other heavy manufacturers. Starting Jan. 1, 2015, the program is set to expand to include oil companies. It is estimated the program could result in at least a 15-cent-per-gallon fuel tax increase.

The state already claims the highest fuel prices in the continental U.S. The average price for a gallon of diesel this week is 4.119, according to the U.S. Energy Information Administration.

Concern about rising fuel costs spurred 16 Democratic Assembly members to send a letter to CARB Chairman Mary Nichols asking her to delay, or redesign, the program for greenhouse gas emissions.

“We request that you delay expanding the cap-and-trade program to cover transportation fuels or at least change the program so that it does not unnecessarily increase fuel costs in order to generate revenue for the state,” the letter states.

Assemblyman Henry Perea, D-Fresno, said the program was created to limit greenhouse gas emissions, not generate revenue for the state.

“This new revenue comes out of the pockets of hard working Californians,” Perea said in a news release. “The Legislature did not ask for the cap-and-trade program to work this way.”

Assemblywoman Cheryl Brown, D-San Bernardino noted the negative effect higher fuel prices would have on Californians who rely on their vehicles on a daily basis. She is asking the governor to delay implementation because of the effect it would have on truck drivers trying to do business in the state.

“We also have a significant trucking sector, which is vital to the health of our economy,” Brown stated.

Republicans at the statehouse are also trying to draw attention to the issue.

Sen. Mike Morrell, R-Rancho Cucamonga, said the worst part of the mandate is that none of the money from this “new hidden tax” would be used to improve roadways. Instead, the money would be earmarked for such projects as a high-speed rail project sought by Gov. Jerry Brown.

“The governor and like-minded legislative leaders want to use the money from this new hidden tax to pay for the high-speed rail boondoggle and myriad other pet projects that won’t help our air quality at all,” Morrell stated.

In addition to the letter sent by Assembly Democrats, Perea has also introduced a bill that would push back the looming rule. Specifically, AB69 would delay for three years the rule requiring the energy industry to purchase permits for transportation fuels.

“A reasonable delay to this policy will give the state time to fully analyze the impacts of bringing fuels under the cap and small businesses and families time to budget for this financial hit,” he said.

The bill can be considered once state lawmakers return from summer recess on Aug. 4.

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