Viewpoints: Sticker shock coming at the gas pump

By Jay McKeeman,
Special to The Bee

Congratulations to the state Legislature for passing an on-time budget!

As always, though, the fine print reveals troubling details. 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.

California’s cap-and-trade system, which requires so-called polluters to purchase allowances to offset carbon emissions, has been in effect for nearly two years. To date, it 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.

Starting next year, however, revenues from cap and trade are expected to jump from the millions to between $3 billion and $5 billion. That’s 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.

A recent poll found that nearly 70 percent of Californians are unaware of this “fuels under the cap” program and the direct impact it will have on their pocketbooks – despite the fact its start date is a little more than six months away. This is hardly surprising given that the California Air Resources Board, which oversees cap and trade, has made no effort to inform fuel consumers about this program.

Instead, the focus of Brown and the Legislature has been how to spend Californians’ hard-earned dollars. Front and center in this debate was Sen. Darrell Steinberg, who just a few months ago spoke of the “spikes and wild fluctuations in gas prices” that this program could cause. He then changed his tune, leading the bandwagon on how to spend the billions raised from these price spikes.

So here is the key question: How much more will drivers pay at the pump?

According to a 2010 economic analysis commissioned by CARB, gas prices are expected to increase between 4 percent and 19 percent as a result of cap and trade. 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.

With some of the highest gas prices in the nation, most Californians who can afford to buy a more fuel efficient car or change their driving patterns have already done so. This program will be just one more hit on the average hard-working family who can least afford to spend more of their monthly income on fuel.

Unfortunately, trying to persuade the governor and Legislature to step back and review this hidden tax – unknown to the public and coming quickly in early 2015 – during an election year is an uphill battle.

Yet, perhaps there is a silver lining here. 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.

Jay McKeeman is vice president of government relations and communications for the California Independent Oil Marketers Association.

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