WSPA Highlights Expansion of California Cap-and-Trade Program

It is good to hear a public dialogue is occurring on the expansion of California’s cap-and-trade system coming Jan. 1, 2015, notes the Western States Petroleum Association (WSPA), when gasoline and diesel used by millions of consumers and businesses will be regulated for the first time under the state’s program. According to economic analysis by the California Air Resources Board (CARB), the expansion of cap-and-trade will increase gasoline prices by as little as 4% and as much as 19%. With gasoline prices currently averaging about $4/gal., that is a price impact of 16 cents to 76 cents.

WSPA, a longtime supporter of California’s clean-air goals, adds that its members’ refineries have been regulated under the state’s cap-and-trade program for stationary sources since 2012, and they have been paying hundreds of millions into the 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, consumers, and the economy at large. The expansion in 2015 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 that the state has done nothing to educate the consumers and businesses that will be impacted by the fuel price increases CARB says will result from the program expansion. More recently, the association has been alarmed by statements by representatives of CARB, the agency responsible for managing the program, which seem contradictory and, in some cases, unclear.

“It’s time for a serious discussion about this regulation and whether or not it best meets California’s environmental and economic goals,” says WSPA. “And it’s time the state provides Californians accurate information about this program and its impact on the price of gasoline and diesel.” Meanwhile, Assemblyman Henry Perea (D-Fresno) has introduced new legislation—AB 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. “Such protections are especially important for low-income families and small businesses that can least afford additional costs,” says WSPA.