Will LCFS raise gas prices? California, Oregon, and WA budget agency say “yes.”

Imposing a low-carbon fuel standard (LCFS), as proposed by a bill in Olympia, will increase gas prices about 10 cents a gallon. Who says so? The state of Oregon does, where they have an LCFS. The state of California does, where they imposed an LCFS a decade ago. And, Stu Clark, the policy advisor at the Department of Ecology who represented Governor Inslee at last week’s hearing on the LCFS.

Of course, he did not say that in the hearing.

To the contrary, he claimed an LCFS would not increase gas prices, which sharply contradicts data from every other jurisdiction and the data presented at a seminar Clark himself organized a just few years ago regarding the impacts of an LCFS.

That data, from the Washington State Office of Financial Management, as well as from the states of California and Oregon, show the LCFS has and will significantly increase gas prices. The only place this fact is disputed is in a legislative hearing.

On January 14th, legislators held the first hearing on HB 1091, which would require a reduction in the carbon-intensity of transportation fuels using biofuels and other methods, similar to policies already adopted in California and Oregon.

The claim that the LCFS has not increased the price of gasoline was a key talking point for advocates of the new requirements. This is a particularly strange claim since both California and Oregon officials openly admit that the LCFS has increased prices, and advocates admit they want the mandate to raise prices for consumers, to drive down fuel use and CO2 emissions with them. …

For example, the State of Oregon has an entire web page, titled “Annual Cost of the Clean Fuels Program,” dedicated to the cost increases imposed by the LCFS. They do not hide the fact that an LCFS increases prices. It is not even controversial.

Oregon officials report that in 2019, when their LCFS policy was only 15 percent of the way to imposing the full requirement, the “average cost of the Clean Fuels Program per gallon of E10 [gasoline] for 2019” was 2.57 cents. For B5 (diesel) it was 2.94 cents per gallon more.

The cost in California is even higher. For comparison, the cost of credits in Oregon per metric ton of CO2 in 2019 was $147.95. In California, it was $191 – 30 percent higher. In a 2018 report, California’s Legislative Analyst Office noted that at $150, which is lower than the current price, the LCFS adds “several cents” per gallon. They prevaricate a bit, saying that government subsidies help reduce that price, but that is just taking money from taxpayers’ one pocket and putting it in the other. …

Further, in the past, Clark organized presentations that admitted an LCFS increases gas prices. In 2015, Clark helped organize a seminar with Jim Cahill of the Washington State Office of Financial Management (OFM) regarding the LCFS that was being proposed. In their presentation, OFM estimated that at a credit price of $100 per metric ton of CO2, the price increase per gallon of gasoline would be between 8 to 10 cents per gallon using four different scenarios. The price in California is currently twice that.

That same seminar included a presentation from Wes Ingram of the California Air Resources Board. Ingram notes that at $100 per metric ton, gasoline production costs “would rise by ~$0.12/gal.” Twelve cents per gallon. Again, the current price of the LCFS in California is twice that. …

Dishonesty in politics is not new or surprising. The fact that advocates of the LCFS are contradicting their own statements from a few years ago while denying data from the states they want to emulate is, however, pretty brazen.

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