The Real “Hidden Gas Tax”

It’s funny that when sudden spikes in gasoline prices line oil company’s pockets at the expense of consumers, it’s nothing but crickets from the industry.  However, when these same oil companies are expected to lower their pollution emissions through longstanding planned state regulations, suddenly they claim to care about low-income customers and shout that these new regulations will make costs too unaffordable for the average person.

For months, new groups claiming to be coalitions of concerned consumers (but really organized and funded by the oil industry itself) have poured millions of dollars into politics and media blitzes warning consumers against skyrocketing gas prices. These campaigns claim that a “hidden gas tax” from AB 32 regulations, which aim to lower emissions produced by transportation fuels, will increase prices at the pump will by 75 cents per gallon or more.

The oil industry seems to have overplayed its hand here, however. The scare tactics touting astronomical fuel costs for consumers were overblown. There are many different factors at play in the formation of gas prices by the time they reach consumers. Analysis is ongoing, but it appears that bringing transportation fuels under the cap-and-trade program is probably adding only a few cents at the pump.

Most importantly, what are we getting for our money?  This year, funding from the cap-and-trade program, which already covers utilities and other industries in addition to transportation fuels, will provide over $1 billion dedicated for:

  • Clean vehicle rebates
  • Sustainable community development projects
  • Water Conservation
  • Energy efficiency and weatherization programs
  • Affordable housing development
  • Transportation alternatives

These investments will help consumers save overall, by reducing the costs of fuel and energy bills and spending less time on the road.  Many of these projects will benefit disadvantaged communities that often suffer the greatest burden from pollution and high fuel costs.  The environmental justice group, Greenlining, bears witness to some of these policies’ positive impacts for everyday people.  In addition, the American Lung Association calculates that dramatic health benefits and cost savings result from lowering pollutant emissions from transportation fuels.  These benefits include:

  • $8.3 billion in avoided health costs by 2025 from reduced air pollution
  • 600 fewer heart attacks and 900 fewer premature deaths
  • 38,000 fewer asthma attacks and 74,000 fewer lost work days

So, do today’s prices at the pump seem low to you?  At the moment, filling up your tank with gasoline might seem like a pretty good deal, but this is where the true “hidden gas tax” comes in.  Oil companies are shoving all of the costs that aren’t included in the price at the pump onto the public though health expenses, environmental damage, water scarcity, and the infrastructure costs of suburban sprawl.  These are the skyrocketing costs we should be worried about.

Producers are betting that cutting gasoline prices will increase demand and stymie investment in new fueling alternatives, so that we’re once again stuck without options and forced to turn to their product regardless of price. Let’s not fall for it!  When it comes to oil, using less means more consumer power.