Countdown to increased fuel costs begins in California

By Keith Goble, Land Line state legislative editor | Tuesday, August 26, 2014

An attempt to thwart at least a 15-cent-per-gallon fuel tax increase in California appears to be lost.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, announced on Friday, Aug. 22, he would not stand in the way of plans to put fuels that include gas and diesel under the state’s cap-and-trade program the first of the year.

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. CARB estimates the program could result in a fuel tax increase between 15 cents and 76 cents per gallon.

The state already claims the highest fuel prices in the continental U.S. The average price for a gallon of diesel this week is $4.084, according to the U.S. Energy Information Administration.

State lawmakers on both sides of the aisle have called for action by Democratic leaders and the governor to prevent the looming tax increase.

Concern about rising fuel costs spurred 16 of the state’s 55 Democratic Assembly members to send a letter to CARB Chairman Mary Nichols asking her to delay, or redesign, the program for greenhouse gas emissions.

Assembly Republicans penned a letter to Gov. Jerry Brown. They requested that the Democratic governor use his executive authority to delay expansion of the program. The lawmakers cite concerns about “wild fluctuations” in the price of gas and diesel that would be caused by linking them to carbon auctions.

Sen. Andy Vidak, R-Hanford, offered a bill with the backing of 10 other Senate Republicans that would exempt gas and diesel from the program.

In addition, Assemblyman Henry Perea, D-Fresno, introduced a bill with nine other Democrats to push back the looming rule. Specifically, AB69 would delay for three years the rule requiring the energy industry to purchase permits for transportation fuels.

However, Steinberg said in a letter written to Perea on Friday, Aug. 22, that he would not bring AB69 up for consideration before the regular session ends on Sunday, Aug. 31.

“Business as usual is unsustainable. Inaction is not an option,” Steinberg wrote. “If we are serious about reducing fuel costs and righting the public health and economic wrongs facing our constituents, we must wean ourselves off fossil fuels and invest in cleaner transportation alternatives.”

The Owner-Operator Independent Drivers Association is on record in support of delaying the mandate. The Association sent communication to California state lawmakers conveying their concerns about the increased costs that small-business truckers would be forced to absorb.

OOIDA is also one of nearly 40 groups to endorse Perea’s bill. In a letter of support to Perea early this month, the groups wrote “this expanded regulation must not happen until the California Air Resources Board fully and transparently assesses and communicates the effects of the expansion to the public.

“This is necessary to ensure that the public fully understands the impacts on individuals and to the state’s economic well-being.”

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