Prepare for $ 5 gasoline

Prepare for $ 5 a gallon of gasoline – especially if you live in California.

At least it was the pretension of a new WSJ Editorial who claims that higher taxes and environmental regulations drive up the price of gasoline.

Author Allysia Finley notes that the average cost at the pump in California is now $ 4.18 per gallon, noting that in 2017, Democrats in the state legislature increased a tax on each gallon by 20, 8 cents over three years.

California drivers now pay an astonishing 63 cents per gallon in state and local taxes, compared to an average of 36.8 cents elsewhere in the country.

The reasoning behind the price hike was to repair the state’s infrastructure, but instead the profits were “directed to projects to reduce greenhouse gas emissions, such as bicycle lanes. and public transport, ”the editorial notes.

The California Air Resources Board is also responsible for imposing a tax through its cap-and-trade program, which added about 14 cents per gallon to the average price of gasoline in the state.

CARB requires retailers to sell “a special blend of super clean-burning gasoline” that raises the price by an additional 10 cents per gallon. The Council “assigns carbon intensity ratings to hundreds of fuels” and requires refiners to score low for blending low carbon fuels. If they cannot meet the threshold, they are forced to buy carbon credits, which also drives up the price of fuel.

The council allocates these credits to utilities when their customers charge electric vehicles at home. The utilities then turn around and sell the credits to the refiners. Drivers of gasoline-powered vehicles subsidize thousands of electric vehicle buyers, the editorial notes:

For example, Californians can get a rebate of $ 1,500 from their local utility in addition to $ 2,000 from the state and $ 7,500 from the federal government for the purchase of an electric vehicle. Soft.

Yet gasoline-powered car drivers are subsidizing utility rebates by raising fuel prices. With the decline in the state’s benchmark carbon intensity, regulatory credit prices have skyrocketed from an average of $ 17 in 2012 to $ 198 in the first quarter of this year. An analysis done last fall by Stillwater Associates estimated that the program would add 24 cents a gallon to the price of gasoline this year and 63 cents by 2030.

Refiners, due to state rules, are turning to the production of renewable fuels, which are now “much more profitable” thanks to regulatory and tax credits. But the conversion of the infrastructure that refineries will need to undertake to produce this fuel – as Marathon Petroleum recently plans to convert a refinery in California – will again mean higher prices for California drivers.

In fact, many refineries have simply closed their doors due to heavy regulations. This means that when the remaining refineries experience blackouts, the price spikes are more severe.

“California drivers can soon expect to pay more than $ 5 a gallon at the pump as the state’s green mandates increase and gasoline refineries close or convert to renewable fuels,” the editorial concludes.

By Zerohedge.com

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