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The U.S. Climate Bill's Hidden Gas Tax

Politicians have spent decades studiously avoiding higher gasoline taxes, to avoid their voter's wrath. But it looks like a new gas tax will finally go ahead, as part of the new American Clean Energy and Security Act, the formal name for the United States' cap-and-trade bill.

Cap-and-trade was originally intended by President Obama to auction off all emissions permits. Concessions have been steadily pushed through for various industries, which for many of them will mean that their costs won't go up much during the bill's probationary period. But the disfavoured oil and gas industry has only managed to get 1.7 percent of the credits up for grab, and only for the period 2014 - 2016. That will mean higher costs from the outset, as refiners are responsible for over four percent of emissions.

Companies like Valero and Tesoro, who lobbied through Texas lawmakers for more credits, will eat the costs. Except not really -- as in the case of utilities, if the refiners face higher costs, those will be passed along to consumers. Gas prices will go up, just as surely as if the gas tax had increased. A Heritage Foundation study cited by the New York Times says the bill will increase gas prices by up to $1.70. (Given the usually suspect nature of Heritage Foundation studies, a figure up to half that is probably reasonable.)

For many years the Federal gas tax has languished near its present 18.4 cents (states have their own, higher gas taxes). All efforts to raise this tax, even to keep up with inflation, have failed, because US consumers, simply put, hate the gas tax. But as it's a useful tool both for raising money to update infrastructure and pushing consumers to drive less, I think it's good that it has finally slipped through in some form.

Unfortunately, if the bill actually does make gas prices go up, voters might turn against the politicians that passed the climate bill, meaning the Democrats. Although the refiners are only a small component of the 932 page bill, this single issue could become one of the more dangerous talking points in the Republican arsenal in coming years.

However, Obama also plans to choose tomorrow to bump up fuel efficiency standards for cars and light trucks, according to BNET Energy. Better fuel efficiency will mean less gas is used, lowering gasoline bills, so Obama may be able to argue that the initiative goes hand and glove with the climate bill's effects.

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