On 25 Jul 2014
Californians strongly support global warming law until push comes to shove,
Starting on January 1, 2015, a cap and trade system will go into effect for all transportation fuels in California, including, of course, gasoline. Oil companies are predicting it will mean an immediate increase of at least 12 cents a gallon at the pump.
When California's cap and trade plan goes fully into effect, it will be the world's most comprehensive carbon-pricing regime, covering electric power and large factories with big carbon footprints, as well as greenhouse-gas emitting products including gas, diesel, natural gas and methane.
While that would appear to motivate Californians to go to the next phase, the carbon reduction plan has, naturally, caused some opposition, especially from fuel distributors who will have to either eat the costs of the permits or pass them on to consumers. The Western States Petroleum Association predicts the cost of cap and trade allowances will add $2 billion to the cost of gas and diesel, or about 12 cents a gallon, CBS/AP reported.
The group of oil companies is instead proposing a carbon tax on fuels starting in 2015.
The idea has the backing of Darrell Steinberg, the leader of the Democratic majority in the California State Senate, who proposes a 15-cent-per-gallon carbon tax. Steinberg argues that a carbon tax would keep fuel prices more stable than a cap and trade system, due to the continually changing price of carbon permits issued by the state.
As California debates the pros and cons of cap and trade versus a carbon tax, they would be wise to look north, to one jurisdiction that implemented the latter. Six years ago, British Columbia passed a tax on fuels and carbon emissions, and the evidence shows it is working. According to The Globe and Mail, the tax, currently about 7 cents a liter, has led to a 16 percent drop in fuel use, compared to a rise of 3 percent in the rest of Canada.
Moreover, the tax is revenue neutral -- meaning revenues raised by the tax require equivalent cuts to other taxes. Since 2008, the province has cut $760 million more in taxes than it needed to offset carbon tax revenue, effectively giving B.C. the lowest personal income tax in Canada and one of the lowest corporate tax rates in North America.