Friday, July 24, 2015

Sky-High California Gas Prices Have a Green Additive

The national average is $2.76 a gallon, while Golden State drivers pay $3.88. Eco-virtue is expensive.

By Allysia Finley of the WSJ. Excerpts:
"The real culprit is anti-carbon regulation promoted by a cartel of green activists and liberal politicians that is aimed at raising energy costs to discourage consumption."

"For most of the 1980s and ’90s, Californians paid roughly the national average, according to U.S. Energy Information Administration data. Since 1999—the year Democrat Gray Davis assumed the governorship following 16 years of Republican leadership—California gas prices have sizably surpassed the national average and most of the lower 48 states, principally due to more stringent fuel regulations. California gas taxes are also about 12 cents higher than the national average.

In 1999, Mr. Davis’s Air Resources Board banned the fuel additive MTBE—a smog-reducing oxygenate that in low quantities has been detected in groundwater. It also adopted cleaner “reformulated” fuel standards that raised production costs. A tiramisu of other environmental mandates have been layered into the state’s fuel standards.

The results? By 2006 Californians were paying 23 cents more than the national average for regular gas. The disparity increased to 40 cents in 2014 and now sits at $1.11. 

Next to crude, electricity ranks as refiners’ largest production cost. Electric rates like gas prices have soared in California thanks to the state’s mandate that requires that renewables make up 33% of the state’s electricity by 2020."

"Over the past three years, electric rates in California rose by 2.18 cents per kilowatt-hour—about four times the rate nationally"

"nuclear plants, which generate cheaper electricity, have been decommissioned"

"The state’s 2006 global-warming law, AB32, also established a cap-and-trade program that requires large industrial companies operating in the state to cut their carbon emissions or buy permits."

"cap and trade would add 16 cents to 76 cents a gallon to the retail price of gas. Other economists projected a 10-cent bump. Sure enough, gas prices skyrocketed this year, though it’s tough to disentangle the impact of cap and trade from other ill-conceived environmental policies.

State and federal environmental mandates have forced several smaller, inefficient refineries in California to shut down over the past two decades. Only 14 refineries in California produce the state’s pristine-burning fuel"

"Few refiners outside the state blend California’s reformulated fuel."

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