Get ready for more expensive gas

Next year, one of the state’s newly adopted climate policies, the low-carbon fuel standard, will take effect in our state. The legislation requires companies to blend biofuels or fund charging stations for electric vehicles. Although it has increased gas prices in California and Oregon, the governor and environmental activists claim it would cost Washington drivers nothing, while the prime sponsor testified it would cost no more than 2 cents per gallon.

“Don’t let anyone give you that swill that this will increase gas prices,” Gov. Jay Inslee said last year as he signed the bill.

Rep. Joe Fitzgibbon, the prime sponsor of the low-carbon fuel bill in the Legislature, was more circumspect, testifying, “In Oregon, which passed its fuel standard in 2015, six years ago, no credible source suggests it has changed fuel prices there by more than 2 cents.”

Were they right? Will it cost little to nothing, as the governor and other advocates claimed, or will it increase the price of energy and gasoline?

The Department of Ecology answered those questions when it released the projected costs for the first three years the new fuel is phased in. And contrary to the predictions, it does raise gas prices.

That is not surprising.

Indeed, at the very time Rep. Fitzgibbon claimed Oregon’s low-carbon fuel standard didn’t increase prices by more than 2 cents, the state of Oregon was saying it did. When he made the claim, we already had the 2019 data showing it increased costs by 2.57 cents per gallon. Soon after his statement, Oregon released the 2020 data showing the standard increased costs by 3.71 cents per gallon. They recently updated the estimate, showing that for 2021, it increased the cost of a gallon of gas by more than 5 cents.

Ecology is now asserting the same thing is likely to happen in Washington state.

Citing an independent report, Ecology staff wrote, “Washington’s new clean fuel standard will mean less than a 1-cent per gallon difference in the price consumers pay at the gas pump in 2023, according to estimates in a third-party economic analysis. Prices could rise up to 2 cents in 2024, and 4 cents in 2025, the report shows.” It also projected that by 2031, the new rules would add 19.3 cents per gallon.

Ecology’s estimate is either “swill,” in the governor’s words, or it shows that Washington will experience exactly what others have seen.

By way of contrast, those projections are almost exactly what we – the Washington Policy Center – predicted. We predicted that in the first year of the new fuel standard, it would add about 1 cent to the price of gasoline, exactly as Ecology’s report indicates. We predicted that it would add about 20 cents per gallon by 2030. Ecology’s report estimates 19.3 cents by 2031. So, we were off by one year.

The truth is, these calculations aren’t difficult. We simply looked at the experience of California and Oregon. We assumed the price impact here would be similar. That is what Ecology found, as well.

It could be argued that an increase of a few cents in the next few years isn’t that much. But the reason the cost is relatively low (when compared to the CO2 tax that will be implemented next year, for example), is that it does nothing. As Ecology staff have admitted, the fuel standard will not reduce CO2 emissions more than the new CO2 cap would already. If the low-carbon fuel standard went away, Washington’s CO2 emissions would be exactly the same.

We pay, little but get nothing.

For those keeping track, the 19.3 cent increase from the low-carbon fuel standard in 2031 would be on top of a projected 80 cent increase per gallon from the state’s new emissions tax. So drivers in Washington will pay an extra 99.3 cents per gallon in hidden taxes on gasoline, in addition to the actual state gas tax of 49.4 cents per gallon and federal gas tax of 18.4 cents per gallon, for a grand total of just over $1.67 per gallon.

It is unclear to me whether the politicians and advocates who said the fuel standard wouldn’t increase gas prices were being intentionally misleading or actually believed what they are saying.

Either way, they were wrong, and the costs will be paid by Washington residents without any benefit to the environment.

– Todd Myers is the director of the Center for the Environment of the Washington Policy Center. Email him at tmyers@washingtonpolicy.org.