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Report: California Carbon Tax Adds 11 Cents To Gas Prices

SACRAMENTO, Calif. (AP) - The California Legislature's nonpartisan analyst estimates the state's pollution tax has raised gasoline prices by 11 cents per gallon and diesel prices by 13 cents, according to a month-old letter released on Thursday.

The pollution tax costs drivers collectively about $2 billion a year, Legislative Analyst Mac Taylor said. His staff calculated the estimate in response to questions from Assemblyman Tom Lackey, R-Palmdale, who is pushing legislation that would require the state to report more detailed information about the costs to drivers.

"These impartial estimates confirm that Californians are paying significantly higher prices," Lackey said in a statement.

Consumers may not have noticed much impact at the pump because the pollution tax came at a time when gas prices were plummeting nationally. The U.S. average for a gallon of gasoline dropped from $3.26 per gallon at the beginning of 2014 to $2.14 a year later, according to the U.S. Energy Information Administration.

California launched the pollution-restriction program in 2012 and began applying it to gas and diesel last year. Known as "cap-and-trade," the program is designed to control emissions of heat-trapping gases and to spur investment in clean technologies. It limits how much pollution businesses can spew, making them buy permits.

The program creates a marketplace for carbon emissions and incentives to reduce greenhouse gasses. The marketplace puts a price on carbon emissions and caps how much individual polluters are allowed to release. Businesses are required to either cut emissions to the cap levels or buy allowances from other companies for each metric ton of carbon spewed over the cap each year.

The carbon-reduction program generates billions of dollars a year for efforts to fight climate change. A large portion of the money is dedicated to California's high-speed rail line and other transportation projects.

Stanley Young, a spokesman for the Air Resources Board, which administers the program, said the estimate of a price spike of 11 to 13 cents is consistent with expectations.

"These proceeds are pumped right back into California - including the most disadvantaged communities - as investments that help clean the air, support the cleanest vehicles for all Californians, and promote safer and more livable neighborhoods," Young said.

The gas-price analysis by the Legislative Analyst's Office assumed that oil companies passed the entire cost to consumers, but Young said there's no requirement that fuel suppliers do so.

The analysis was based on the $12.73-per-ton price for allowances in the most recent auction, held in February. It says some people paying the higher gas prices will ultimately benefit from the money it generates.

Democratic Gov. Jerry Brown, a vocal advocate for reducing carbon emissions, has proposed spending $3.1 billion of money from the program on initiatives that include incentives for electric vehicles, transit programs and biofuel subsidies.


Copyright 2016 The Associated Press.

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