“For Californians already stretched thin by escalating rents and inflation, these additional costs could become overwhelming, pushing many into deeper financial insecurity,” Former California Senator Dean Florez stated.
It’s no secret that California’s administration has set some very ambitious climate goals for themselves in the near future. Governor Gavin Newsom’s environmentally focused administration plans to keep the Golden State on track to achieve net-zero emissions by 2045.
Whether or not the state can meet its own metrics—and whether an unwavering commitment to those ideals is something residents can continue fronting the bill for—is another story entirely.
The California Air Resources Board first approved the Low Carbon Fuel Standard in 2009, and has made necessary amendments in the years since. The main goals of the LCFS are to incentivize the use of cleaner fuels in the state and to reduce greenhouse gas emissions caused by transportation. Generally, when the LCFS enacts a new slate of climate rules, it comes with increased gas prices. It’s one of the main reasons Californians pay so much more at the pump than residents of other states.
This is perhaps best summarized in a 2022 letter written by Valero Vice President Government Affairs Scott Folwarkow to California Energy Commission Chairman, David Hoschschild, in which Folwarkow describes the Golden State not only as “the most expensive operating environment in the country” but also “a very hostile regulatory environment for refining” and “ the most challenging market to serve in the United States.”
“California has imposed some of the most aggressive, and thus expensive and limiting, environmental regulatory requirements in the world,” argues Folwarkow. “California policy makers have knowingly adopted policies with the expressed intent of eliminating the refinery sector. California requires refiners to pay very high carbon cap and trade fees and burdened gasoline with cost of the low carbon fuel standards… California regulators have mandated a unique blend of gasoline that is not readily available outside of the West Coast…”
With that prelude out of the way, the LCFS was voted to be revamped last year—enacting a new slate of climate rules which, evidently, has upset both sides of the aisle. That includes environmentalists.
“It is not based on science, and it will undermine environmental justice and the rapid transition to zero emissions that we need more than ever today,” Nina Robertson, a senior attorney with Earth Justice told the board. “It represents a grab bag of giveaways to polluting special interests that have turned what once was a program for climate progress into a piggy bank for their false climate solutions.”
The other side of that coin is Republican Assemblyman Tom Lackey, who warned the California Air Resources Board about possible gas price increases: “We’re the hard working men and women here in the state of California. We build homes, we fix roads, and we serve you when you dine out. To do this, we must drive hours each day to work to put food on the table for our families. This measure before you will cause us financial pain.”
“For Californians already stretched thin by escalating rents and inflation, these additional costs could become overwhelming, pushing many into deeper financial insecurity,” added Former California Senator Dean Florez.
California residents already experience a high cost of living, even aside from gas prices. Another troubling matter for residents is the steep increase in auto insurance rates. At the end of 2023, Californians had begun to notice the difficulty in finding an affordable automobile insurance plan. The Vice President of State Government Relations for the American Property Casualty Insurance Association stated that a cause of the higher insurance premiums stemmed from supply-chain issues that took place during the pandemic.
As of March 2024, overall prices in California had gone up nearly 20% since 2020. Sarah Bohn, director of the Public Policy Institute of the California Economic Policy Center, compared steady wages with the massive uptick in inflation: “Wages only grew 15% than before the pandemic. On paper, that looks amazing, like a $5-an-hour increase. But after inflation, it feels like a pay cut—I calculated that it’s like a $1.25-an-hour cut.”
Those increased gas prices may have been the straw that broke the camel’s back.
Ultimately, after having been stalled for a great duration, the controversial fuel standard was rejected by the California Office of Administrative Law, who deemed that it lacks “clarity.” This is an embarrassing blow to eco-warriors and lobbyists who have long claimed that California is in a class of its own with regard to environmental stewardship.
“If LCFS credit prices reach their maximum allowed levels, as has occurred in the past, then retail gasoline price impacts could be $0.65 per gallon in the near term, $0.85 per gallon by 2030, and nearly $1.50 per gallon by 2035,” states a representative from the University of Pennsylvania’s Kleinman Center for Energy Policy.
“Families in this state are already grappling with soaring living costs, and a gas price hike of 65 cents or more will only deepen their financial strain,” said Senator Rosilicie Ochoa Bogh (R-Redlands). “It’s deeply frustrating that the governor’s administration ignored calls for reconsideration from the start.”
Though gas prices in Orange and Los Angeles counties were at their peak between February and October of 2022, nearing $7 to $8 per gallon at some select gas stations, it would be detrimental to California families if prices were to return to this unprecedented level. Once more, we return to that prophetic Valero letter: “Adding further costs, in the form of new taxes or regulatory constraints, will only further strain the fuel market and adversely impact refiners and ultimately those costs will pass to California consumers,” warned Folwarkow in 2022.
Perhaps they should have taken that warning more seriously.
