Politicians tout falling gas prices while defending policies that inflate energy costs.
gettyThe White House is advertising gas prices are dropping ahead of the Thanksgiving holiday. However, the downward trend in fuel costs will strike many as an inconvenient data point for the Biden administration to advance. That’s because this administration and more high-profile Democratic governors have enacted or are in the process of enacting policies that raise oil and gas prices by design, then increasing costs at the pump.
California, for example, the nation’s most populous and perhaps bluest state, has had a state cap-and-trade program for carbon emissions for more than a decade. Even cap-and-trade supporters, however, admit that the program raises fuel costs and do so as a feature, not a bug.
According to the latest estimates from the California Air Resources Board, cap-and-trade adds 27 cents to the cost of every gallon of gasoline sold in California. The average price of a gallon of natural gas in California it is now $4,962, which is 50.5% higher than the National average of $3,295.
In a Position Published on October 23, California’s nonpartisan Legislative Analyst Office (LAO) explains that “cap and trade raises the market price of gasoline in California.” LAO notes the regressive nature of the program in this post, which is intended to answer frequently asked questions about California’s cap-and-trade system.
“High gas prices disproportionately affect lower-income households, who tend to pay a greater share of their income on transportation costs,” LAO said. explained. “That’s partly because lower-income residents have moved more from jobs in recent years in response to rising housing costs in California’s metropolitan centers, forcing them to spend more on gas because of longer commutes.”
Josh Shapiro is imposing new taxes on Pennsylvania without legislative approval
Meanwhile, on the other side of the country, nearly three months after reversing course on his earlier support of school choice, Pennsylvania Gov. Josh Shapiro (D) took action this week that will make his moderate image take another hit. Shapiro announced Nov. 21 that he will seek to overturn a recent court ruling blocking a regional cap-and-trade program that bipartisan state lawmakers oppose because it would inflate utility bills and other energy costs in the Keystone State. On November 1, Judge Michael Wojcik issued a decision repealing Pennsylvania’s Regional Greenhouse Gas Initiative (RGGI) as an illegal tax imposed without the necessary legislative approval.
Gov. Josh Shapiro’s (D-Pa.) predecessor, Tom Wolf (D), took executive action in April 2022 to bring Pennsylvania into the RGGI despite objections from bipartisan majorities in both houses of the state legislature. Judge Wojcik ruled that the RGGI imposes a tax, which requires a signature from the state legislature, which was not achieved or even sought by Wolf or Shapiro. “Simply stated, to pass constitutional muster, Commonwealth participation in RGGI can only be achieved through legislation duly enacted by the Pennsylvania General Assembly,” Judge Wojcik He wrote in my opinion.
“A bipartisan majority of Pennsylvania lawmakers have consistently voted against RGGI when the issue has been brought up,” said State Sen. Gene Yau (R-Pa.) he said in response to the November 1 decision to overturn RGGI. “I appreciate the Commonwealth Court’s rejection of this unconstitutional maneuver.”
The Power PA Jobs Alliance, an industry coalition opposing RGGI, celebrated the Nov. 1 decision, calling it an opportunity for Governor Shapiro to “step up” and “engage the General Assembly on energy policies that ‘maintain Pennsylvania’s status as the nation’s number one electricity exporter and protect existing energy jobs.’ they do not see the November 1 ruling as such an opportunity, announcing that his government will seek to enforce RGGI by appealing Judge Wojcik’s ruling.
“Just before Thanksgiving, Shapiro stated his desire to fight for the unilateral authority to raise electricity taxes,” Commonwealth Foundation senior vice president Nathan Benefield said. he said in a statement. “It’s a move that could burden Pennsylvanians with higher taxes and electric bills and undermine the reliability of our electric grid.”
“RGGI represents an unconstitutional energy tax imposed by executive order,” Benefield added. “It’s disappointing to see Shapiro embrace his predecessor’s radical policies and ignore his earlier concerns about RGGI’s process and consumer costs. If implemented, RGGI will be almost stripped 800 million dollars by the private sector to redistribute government, while increasing electricity bills for businesses and homeowners by staggering 30%.”
North Carolina Lawmakers Block Cap-and-Trade by Executive Fiat
A spokesman for North Carolina Gov. Roy Cooper (D) confirmed in 2021 that joining the RGGI “is a policy option under consideration” in his administration. However, while Governor Shapiro continues Tom Wolf’s effort to impose RGGI without legislative approval in Pennsylvania, such executive action is something that is no longer an option for Cooper. That’s because lawmakers in Raleigh recently enacted a new state budget that includes a provision that makes clear that cap-and-trade regulatory regimes like RGGI cannot be enacted in North Carolina without approval from state senators and representatives.
“It prevents our state from moving forward with a failed energy policy that raises rates and reduces reliability,” said Rep. Dean Arp (R) of the push to include a cap-and-trade provision in the new state budget. While North Carolina’s new budget, which passed with bipartisan support, prevents cap-and-trade in North Carolina through executive action alone, New York’s new state budget creates the nation’s newest cap-and-trade program.
Even before cap-and-trade, the average price of a gallon of gas in New York is already 10% higher than the national average. After studying the potential impact of the newest cap-and-trade program, the New York Department of Environmental Conservation and the New York State Energy Research and Development Authority found that cap-and-trade could raise the price of natural gas in New York York by 62-cents per gallon and an 80% increase in gas prices. In addition to imposing a regressive tax on drivers, state officials concluded that the cap and trade would negatively affect the 60 percent of New Yorkers who heat their homes and apartments with natural gas.
After Cap-and-Trade, Washington State Lawmakers Propose Bill to Reduce Transparency in Fuel Prices
Washington State became the latest state to launch a cap-and-trade program in early 2023. At $4.417 per gallon, the average Natural gas in Washington State is currently 34.6% higher than the national average.
“The new carbon tax system requires companies that emit coal to buy government allowances to do so, paying a price determined by a public auction.” explains Todd Myers, director of the Center for the Environment at the Washington Policy Center. “The state’s first auction of CO2 allowances took place in late February, with the average price reaching $48.50 per metric ton (MT) of carbon. We noted that at that price it would add about 39 cents to a gallon of gasoline and 47 cents per gallon to diesel for consumers at the pump.”
As an example of how fuel suppliers were responding to the new government regulations issued by Olympia, Myers noted that “British Petroleum (BP) invoices show a line item for the government’s cap-and-trade CO2 tax – referred to as ‘WA Cap at the Rack’ – for diesel without the 5% biodiesel blend, 56 cents per gallon, which translates to about $55 per MT CO2.
In an effort to prevent businesses from showing consumers how much fuel costs are due to the new taxes, Washington lawmakers this year introduced Senate Bill 5766, legislation that would prohibit fuel suppliers from showing customers how much of the price of natural gas gas consists of taxes. The bill has yet to make it out of committee.
“As designed, Washington state’s new tax on CO2 emissions raises the price of gasoline, diesel and other fossil fuels,” Myers added. “Some of the lawmakers who supported this tax increase, however, now want to prevent the public from knowing about it.”
President Biden, Vice President Kamala Harris and other progressive politicians tend to tout the recent drop in gas prices. But there’s a discrepancy between such claims and the way Democrats’ big policies are designed to raise fuel prices and inflate other energy costs.
