Politicians tout falling gas prices while championing policies that inflate energy costs.
The White House is touting declining gas prices heading into the Thanksgiving holiday. Yet the downward trend in fuel costs will strike many as an awkward data point for the Biden administration to promote. That’s because this administration and the most high profile Democratic governors have implemented, or are in the process of imposing polices that increase oil and gas prices by design, subsequently raising costs at the pump.
In California, for example, the most populous and perhaps bluest state in the nation, a state cap-and-trade program for carbon emissions has been in place for more than a decade. Even cap-and-trade proponents, however, concede the program raises fuel costs and does so as a feature, not a bug.
According to the California Air Resources Board’s latest estimates, cap-and-trade adds 27 cents to the cost of every gallon of gasoline sold in California. The average price of a gallon of gas in California is now $4.962, which is 50.5% higher than the national average of $3.295.
In a post published October 23, California’s non-partisan Legislative Analyst Office (LAO) explains that “cap-and-trade increases the price of purchasing gasoline in California.” The LAO remarks on the program’s regressive nature in that post, which is intended to answer frequently asked questions about California’s cap-and-trade system.
“Higher gas prices disproportionately impact lower-income households, which tend to pay a larger share of their income towards transportation costs,” the LAO explained. “This is due in part to lower-income residents having moved further from places of employment in recent years in response to rising housing costs in California’s metropolitan centers, forcing them to spend more on gas due to longer commutes.”
Josh Shapiro Pushes New Taxes In Pennsylvania Without Legislative Approval
Meanwhile on the other side of the country, nearly three months after he reversed course on his previous support for school choice, Pennsylvania Governor Josh Shapiro (D) took an action this week that will cause his moderate image to take another hit. Shapiro announced on November 21 he will seek to overturn a recent court ruling that blocks the imposition of a regional cap-and-trade program opposed by state legislators from both parties because it would inflate utility bills and other energy costs in the Keystone State. On November 1, Judge Michael Wojcik issued a ruling striking down the implementation of the Regional Greenhouse Gas Initiative (RGGI) in Pennsylvania, deeming it to be an illegal tax imposed without necessary legislative approval.
Governor Josh Shapiro’s (D-Pa.) predecessor, Tom Wolf (D), took executive action in April of 2022 to enter Pennsylvania into RGGI despite objections from bipartisan majorities in both chambers of the state legislature. Judge Wojcik ruled that RGGI imposes a tax, which requires signoff from the state legislature, something that was not obtained nor even sought by Wolf or Shapiro. “Stated simply, to pass constitutional muster, the Commonwealth’s participation in RGGI may only be achieved through legislation duly enacted by the Pennsylvania General Assembly,” Judge Wojcik wrote in his opinion.
“A bipartisan majority of Pennsylvania legislators have consistently voted against RGGI when the issue has been brought to the floor,” state Senator Gene Yaw (R-Pa.) said in response to the November 1 ruling overturning RGGI. “I appreciate the Commonwealth Court’s rejection of this unconstitutional maneuver.”
Power PA Jobs Alliance, a coalition of industries opposed RGGI, celebrated the November 1 decision, calling it an opportunity for Governor Shapiro to “move forward” and “engage the General Assembly on energy policies that ‘retain Pennsylvania’s status as the nation’s number one exporter of electricity and protect existing energy jobs.’” On November 21, Governor Shapiro made clear he does not view the November 1 ruling as such an opportunity, announcing his administration will seek to impose RGGI by appealing Judge Wojcik’s decision.
“Right before Thanksgiving, Shapiro proclaimed his desire to fight for the unilateral authority to raise electricity taxes,” Commonwealth Foundation senior vice president Nathan Benefield said in a statement. “It’s a move that could burden Pennsylvanians with higher taxes and electricity bills and undermine the reliability of our electrical grid.”
“RGGI represents an unconstitutional energy tax imposed by executive fiat,” Benefield added. “It is disheartening to see Shapiro embrace his predecessor’s radical policies and ignore his previously stated concerns with RGGI’s process and consumer costs. If implemented, RGGI would strip nearly $800 million from the private sector for government redistribution while increasing electric bills for businesses and homeowners by a staggering 30%.”
North Carolina Lawmakers Block Cap-And-Trade By Executive Fiat
North Carolina Governor Roy Cooper’s (D) spokesman confirmed in 2021 that joining 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 making clear that cap-and-trade regulatory regimes like RGGI cannot be instituted in North Carolina without approval from state senators and representatives.
“It prevents our state from going down a failed energy policy that raises rates and reduces reliability,” Representative Dean Arp (R) said of the impetus for including a cap-and-trade-blocking provision in the new state budget. While the new North Carolina budget, which passed with bipartisan support, blocks imposition of cap-and-trade in North Carolina via executive action alone, New York’s new state budget creates the nation’s newest cap-and-trade program.
Even before the institution of 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 likely impact of the newewst 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 gas in New York by 62-cents per gallon and increase natural gas prices by 80%. Aside from imposing what is effectively a regressive tax on drivers, state officials concluded cap-and-trade will negatively affect the 60% of New Yorkers who warm their homes and apartments with gas.
After Imposing Cap-And-Trade, Washington State Lawmakers Propose Bill To Reduce Transparency In Fuel Prices
Washington State became the most recent state to rollout a cap-and-trade program at the beginning of 2023. At $4.417 per gallon, the average price of gas in Washington State today is 34.6% higher than the national average.
“The new carbon tax system requires companies that emit carbon to buy state-issued 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 occurred at the end of 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 for diesel for consumers at the pump.”
As an example of how fuel suppliers were responding to the new state regulations promulgated from Olympia, Myers noted that “invoices from British Petroleum (BP) show a line item for the state’s cap-and-trade CO2 tax – listed as ‘WA Cap at the Rack’ – for diesel without the 5% biodiesel blend, of 56 cents per gallon, which translates to about $55 per MT of CO2.”
In an effort to prevent businesses from showing consumers how much fuel costs are driven by new taxes, this year Washington lawmakers introduced Senate Bill 5766, legislation that would prohibit fuel suppliers from showing customers how much of the price of gas is comprised of taxes. That bill has not yet made it out of committee.
“As intended, Washington state’s new tax on CO2 emissions is increasing the price of gasoline, diesel and other fossil fuels,” Myers added. “Some of the legislators who supported that tax increase, however, now want to prevent the public from learning about it.”
President Biden, Vice President Kamala Harris, and other progressive politicians are inclined to tout the recent drop in gas prices. There is incongruity between such claims, however, and the way in which major policies enacted by Democrats are designed to increase fuel prices and inflate other energy costs.