Gas station event to decry law’s ‘hidden tax’

Posted by Kassy Perry

Date: July 2, 2014
Outlet Full Name: The Bakersfield Californian
Author: John Cox
Read Full Article on The Bakersfield Californian

Business and political leaders plan to gather at a Coffee Road gas station Wednesday to call attention to a state law they say will significantly raise pump prices early next year.

Organized by the California Independent Oil Marketers Association, the “Fed Up at the Pump” event is expected to criticize rules geared toward reducing the state’s greenhouse gas emissions to 1990 levels by 2020, as required by 2006’s landmark Assembly Bill 32.

The trade group says the rules will impose steep new costs on wholesale fuel distributors, who will have no choice but to raise gasoline and diesel prices on consumers.

“We want everyone to understand we’re not to blame for this” upcoming price hike, Jay McKeeman, the association’s vice president of government relations, said in an interview Tuesday.

But a spokesman for the agency that developed the rules, the California Air Resources Board, said fuel distributors do have a choice. They can switch to selling fuels such as biodiesel that overall don’t produce greenhouse gases such as methane and carbon dioxide, or they can choose to absorb the rules’ added costs themselves.

“There’s no rule that any cost of compliance must be passed through the consumers,” spokesman Dave Clegern said. “That’s purely a decision of the … suppliers.”

Starting next year, fuel suppliers will join power plants and other stationary emissions producers in having to comply with AB32’s cap-and-trade system. They either will have to buy clean-air credits from companies that have already reduced their emissions, or participate in auctions where emission allowances are sold by the state.

McKeeman said complying with the law will end up costing motorists between 12 and 75 cents per gallon, though the actual cost will likely vary from year to year.

What the final impact on consumers will be remains “fuzzy,” said Jeff Spring, spokesman for the Automobile Club of Southern California. Because the law’s implementation extends over several years, he said, it will be up to industry how to recoup its costs.

“The question is, how are (fuel) producers going to work with it?” he said.

One of the bigger concerns is that the effects will be felt well beyond individual motorists. Some of the speakers scheduled to speak Wednesday at the Fastrip at 1200 Coffee Road say higher fuel prices will ripple through the local economy, leading to higher food prices.

“This increase in fuel prices is just another increase in a farmer’s budget,” said Beatris Sanders, executive director of the Kern County Farm Bureau. As an alternative, she proposed government incentives to persuade farmers to trade in their old tractors for more fuel-efficient equipment.

Another scheduled speaker, Loron Hodge, chaplain and director of the Hope Center, said the poor Bakersfield families his charitable organization serves can scarcely afford any increase in gas prices.

State Sen. Jean Fuller, R-Bakersfield, agreed that AB32’s “hidden tax” on fuel will hit society’s most vulnerable.

“Higher fuel prices will lead to higher food prices,” Fuller said in an emailed statement. “And, given the historic drought, Central Valley farmers will find it even more difficult to stay in business.”