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‘Sticker Shock’ Coming to California Gas Consumers

Californians will pay an additional 15 cents or more per gallon as a result of a state agency-mandated gas fee.
June 23, 2014

​SACRAMENTO – As with most legislation, whether federal or statewide initiatives, the devil is often in the details.

Jay McKeeman, vice president of government relations and communications for the California Independent Oil Marketers Association (CIOMA), penned an article for the Sacramento Bee last week congratulating the state Legislature for passing a budget on time. He also pointed out a troubling aspect of the state’s cap-and-trade system that most residents are unaware of.

“A significant problem is that billions of dollars allocated to this and future budgets are new monies that will be coming straight from consumers, thanks to a state program most Californians have never heard of,” he wrote, in reference to California’s cap-and-trade system, which requires so-called polluters to purchase allowances to offset carbon emissions.

McKeeman noted that the program has raised “hundreds of millions of dollars, over which Gov. Jerry Brown, legislators and special interests have been jockeying for months about how to spend.”

But beginning January 1, 2015, revenues from cap and trade “are expected to jump from the millions to between $3 billion and $5 billion” because gasoline and diesel will be included in the cap-and-trade program. “This means those ‘polluters’ who will be footing the financial windfall for the state aren’t smokestack industries, but California drivers,” McKeeman wrote.

He continued that a recent poll suggests 70% of Californians are unaware of this “fuels under the cap” program and the direct impact it will have on their wallets — “despite the fact that its start date is a little more than six months away.”

So how much more will California drivers pay at the pump?

According to a 2010 economic analysis commissioned by the California Air Resources Board (CARB), gas prices are expected to increase between 4% and 19% as a result of cap and trade, noted McKeeman. “With gas hovering around $4 a gallon in most regions of the state, this translates to 16 to 76 cents more per gallon. Under this scenario, it’s not hard to imagine a day very soon when it will cost $100 for a tank of gas.”

However, trying to persuade the Brown administration and Legislature to take a step back and review this hidden tax  during an election year is an uphill battle, McKeeman noted.

CIOMA is actively educating consumers about this issue through its “Fed Up at the Pump” grassroots campaign. The association is lobbying the Brown administration and Legislature to delay implementation of the Fuels Under the Cap portion of the CARB’s cap-and-trade regulation, as well as engage in a more deliberate and transparent dialogue on fuel carbon assessment.

“Yet, perhaps there is a silver lining here,” McKeeman summarized. “At least these budget conversations are finally bringing to light what’s coming down the pike for California drivers. Now it’s time for drivers to speak up, or be prepared to pay up.”