A recent Associated Press news item by Jason Dearen and Don Thompson warns us that we may experience an immediate 12 cent increase in gas prices as a direct result of California's greenhouse gas reduction law. Moreover, this 12 cent gouge is just the beginning; gas prices could ultimately increase by as much as 40 cents per gallon.
AB 32, a California State Assembly bill passed in 2006, requires the reduction of statewide "Green House Gases" (GHG) emissions to 1990 levels but gives air-polluters until 2020 to get the job done. Accordingly, one might assume fourteen years is plenty of time for these massive air polluters to clean up their act.
It turns out the California Air Resources Board (ARB) is utilizing California's "Cap and Trade" program as an enforcement device to implement AB 32. In general, the policy requires companies that produce pollution, such as a utility or a refinery, to buy "permits" from the State which would allow a specified amount of carbon dioxide and other greenhouse gases be released into the air each year. In successive years the amount of credits would be reduced by 2 or 3 percent. The "Unused" permits could be bought and sold by the polluters in a marketplace or over the internet.
The logic behind this scheme is "jaw-dropping" to say the least. If one company is able to lower its pollution, but sells off credits to others thus allowing them to exceed pollution requirements, how are California's greenhouse gases reduced? Why should a polluter be required to buy credits instead of spending the same money to correct his air quality problem? But most of all, why should consumers be asked to pay for this Cap and Trade boondoggle?
An August 14, 2012, Sacramento Bee editorial warned this "global-warming law" is a job killer and a $1 billion tax that could force some of the state's heaviest industries to flee. But under a new plan being considered, the state would dole out extra carbon credits; accordingly, the 430 affected companies would get most of their allowances from the state for free - some 90 percent in each of the first two years. But many business leaders claim that even with loads of free credits, the cost of purchasing the rest could be prohibitive. Indeed, it is estimated California industries are expected to pay $1 billion or more for allowances.
The Air Resources Board denies this cap and trade program is a tax scheme; however, PG & E requested a rate increase in 2012 in order to purchase these carbon credits, and now the California taxpayer is hit again with rising gas prices.
The requirement that polluters pay for some sort of carbon credit instead of spending that same money for air quality repairs and the fact these costs are passed on to the consumer has the distinct aroma of a hidden tax. Moreover, it is a tax which the consumer had no opportunity to vote upon in accordance to Proposition 13.