CARB, gas price battle ramps up
CARB, gas price battle ramps up
Pressure mounts as the California Air Resources Board to vote on new policy amid concerns over a significant increase to gas prices and lack of transparency
STATE — One of the biggest and most controversial issues heading into Tuesday’s election is not on the ballot.
Instead, it’s the upcoming vote from the California Air Resources Board and the potential for raising gas prices after the election. Media and political pressure have reached a boiling point ahead of a crucial decision coming from CARB on Friday in Riverside.
For weeks CARB has dodged questions from reporters, elected officials and the public, although two representatives did answer some questions in recent days, but avoided specific answers to how much gas prices may increase. Critics have slammed the agency for holding the meeting three days after the election, along with the potential of putting more financial stress on residents.
California has the second-highest gas prices in the nation with only Hawaii being more expensive. According to AAA, the average price for a gallon of regular unleaded was $4.56 and $4.92 for diesel on Thursday.
Meanwhile, CARB’s 2023 analysis found the increase would be 47 cents per gallon for unleaded, while diesel would be more than 50 cents per gallon, as previously reported by North County Pipeline. Prices are also projected to increase by a total of 85 cents for unleaded by 2030.
Gas taxes and fees also contribute to high prices, while Senate Bill 1 automatically adds about 2 cents to the state’s tax every year. Drivers pay about $1.20 in taxes per gallon, according to reports, with 55 cents attributed to the LCFS, according to the California Energy Commission.
“The compliance costs are expected to have some impact,” CARB Executive Officer Steven Cliff told reporters on Wednesday. “In terms of the overall impact of gas costs in California, our analysis shows that the total cost of driving, including gas costs, will continue to decline.”
The issue stems from a CARB analysis and changing its policy to put stricter limits on the carbon intensity of transportation fuels under its Low Carbon Fuel Standard (LCFS). The analysis, which was done in September 2023 per the Los Angeles Times, showed a shift in policy would raise gas prices 47 cents per gallon for unleaded fuel with increases to diesel at more than 50 cents.
An analysis by Danny Cullenward, a senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania, said if LCFS credit prices have moderate increases, the short-term impact could be 26 cents per gallon and 34 cents by 2030. However, Cullenward said if the maximum LCFS credit and 100% cost pass-through are applied, the total increase could be as much as 65 cents per gallon in the near term, 85 cents by 2030 and nearly $1.50 by 2035.
Cullenward also slammed CARB in an op-ed in CalMatters for the agency saying it is impossible to determine how much drivers will be charged for the fuel standard program going forward.
“The first issue concerns the program’s overall alignment with California’s strategy for decarbonizing transportation. Although the state’s primary objective is to replace combustion vehicles with zero-emitting alternatives, about 80% of the LCFS credits issued to date — worth more than $17.7 billion in 2023 USD — have instead gone to combustion-based biofuels,” Cullenward wrote in his analysis. “The primary justification for supporting biofuels in the LCFS is that the state expects a ‘long tail’ of diesel consumption, due to the slower turnover of heavy-duty vehicles.
“State regulations mandate a transition to zero-emission heavy-duty vehicles, but that transition needs investment in fast-charging infrastructure and vehicle rebates. The LCFS puts the state’s transition goals further at risk because it primarily funnels capital toward replacing fossil diesel with biofuels rather than toward electrification.”
Regardless, over the past several months, CARB has walked back claims its decision will raise gas prices, although staff and the Board of Directors have yet to answer questions as to how the decision will not impact drivers at the pump or oil companies passing through costs.
After a back-and-forth with a reporter on Wednesday, Cliff said costs for refiners will increase. Several weeks ago, though, Cliff told the Times the agency is not equipped to analyze the effect on retail prices and released the analysis as mandated by law.
When asked if the goal of CARB is to make gas so expensive it pushes residents in electric vehicles, Chairwoman Liane Randolph “didn’t directly answer,” according to KCRA reporter Ashley Zavala.
The LCFS is mandated by state law as the state rushes to meet net-zero and zero-emission goals by 2045. Several years ago, Gov. Gavin Newsom issued an executive order requiring electric vehicle sales from 2035 and beyond.
The contentious issue is reaching a fever pitch as Republican leadership sent a letter demanding transparency and calling on Newsom to postpone the meeting and for him to repeal ABX2-1, which address minimum gas supplies.
The letter draws attention to Phillips 66 announcing the closure of the state’s seventh largest refinery, which accounts for 8.1% of the state’s refining capacity, along with Valeo’s Chief Executive Officer saying, “all options are on the table,” citing the state’s regulatory environment. Valero’s refineries make up 13.5% of refining capacity.
“The looming decrease from nine to eight oil refineries in the state will result in significant impacts on the energy market and the state’s economy,” the letter reads. “Fuel prices will rise, unemployment will increase, and California will be forced to import energy from states and countries that do not share our environmental goals, undermining the policies you promote.”
Newsom said he wants more honesty from the agency, although has not acted, according to reports. Of the 14 voting members of the CARB Board of Directors, Newsom appoints 12, including San Diego County Supervisor Nora Vargas.
Vargas, though, is also the chairwoman of the San Diego Association of Governments, which also meets on Friday. A spokeswoman for Vargas said the “modality” of Vargas’ attendance is still being determined. Questions regarding transparency from CARB, the potential for gas price increases and the impacts were directed to CARB staff, while the spokeswoman said cannot comment on tabling the issue as it is currently under consideration by the board.
A spokesperson, though, from Newsom responded to the letter from Republicans saying the governor and CARB are protecting consumers.
“We’re protecting Californians from price hikes at the pump and cleaning our air,” the spokesperson said. “These Republicans are trying to take us backwards because it would be good for Big Oil and their profits. By helping protect against price spikes and cutting pollution, these policies will save Californians billions every year in lower fuel costs and better health outcomes.”
Sen. Melissa Hurtado (D-Bakersfield), though, sent a letter to the California Legislative Analyst’s Office on Wednesday asking for the LAO to produce a report on the economic impacts of the LCFS by Friday’s meeting. She also referenced the legislator passing, and Newsom signing, a controversial bill requiring oil refiners to maintain minimum fuel inventories and a plan for resupply during refinery outages and maintenance to prevent disruptions and price volatility.
Her letter requests the LAO to focus on four areas:
Projected consumer costs;
Economic disparities and regional effects;
Impact on small business and the supply chain;
Regulatory interaction and market stability
“The Independent Emissions Market Advisory Committee has projected that, under the current policy trajectory, fuel costs could increase by as much as 85 cents per gallon by 2030,” Hurtado’s letter reads. “Despite these substantial estimates, the ARB has yet to present a clear regulatory impact analysis before advancing further LCFS amendments, which raises questions about the comprehensiveness of the assessment provided to policymakers and the public.”
CARB’s decision, along with the passage of ABX2-1, is raising alarm bells in Arizona and Nevada. About 85% of Nevada’s transportation fuel comes from California, while Arizona is at about 50%.
Chevron, which announced it will move its headquarters from Northern California to Texas as a result of the legislation, has placed advertisements in Nevada railing against CARB and Newsom. The ads at local gas stations state California policies are the reason for high prices in the Silver State.
Also, the governors of Arizona and Nevada sent a joint letter to Newsom asking him to withdraw the oil refinery bill, but Newsom declined. Nevada has the fourth-highest gas prices at $3.80, while Arizona is 12th at $3.24. Texas is the lowest at $2.68, while the national average is $3.13.
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