The “Hidden” Gas Tax That Wasn’t

Remember when oil companies cried last year about transportation fuels going under California’s cap-and-trade program in 2015?  They tried to scare everyone about the “hidden gas tax” and how prices would rise 76 cents a gallon.  As Bruce Maiman in the Sacramento Bee reminisces:

For months, the warnings were endless: Come January, gas prices would jump as much as 76 cents a gallon. “Put the brakes on the Hidden Gas Tax!” implored countless Facebook ads.

Anyone seeing pump prices skyrocketing?

Never mind that oil prices plummeted last year as a gallon of regular dropped in California from $4.13 last summer to $2.59 now – $2.48 in the Sacramento region. I’m sure most of the many thousands who hit the Facebook “like” button didn’t bother to investigate the California Drivers Alliance, or 15 other groups harping the same sky-is-falling message. A casual observer likely believed their claims of being a grass-roots group rising up against devious bureaucrats trying to sneak another tax past you.

In truth, what was hidden was the real identity of these front groups, all funded by the oil industry – the Western States Petroleum Association and the California Independent Oil Marketers Association, longtime opponents of Assembly Bill 32, California’s 2006 landmark legislation to reduce greenhouse gas emissions to 1990 levels by 2020. The cap-and-trade system expanded this year to cover vehicle fuels.

Read more here:

Luckily for environmental advocates, the global oil glut has kept the political pressure off this issue, allowing California to greatly expand the cap-and-trade system.

Now let’s hope that advocates can use these big price drops to finally end the subsidies for oil and gas around the country, as the Economist called for today:

The most straightforward piece of reform, pretty much everywhere, is simply to remove all the subsidies for producing or consuming fossil fuels. Last year governments around the world threw $550 billion down that rathole—on everything from holding down the price of petrol in poor countries to encouraging companies to search for oil. By one count, such handouts led to extra consumption that was responsible for 36% of global carbon emissions in 1980-2010.

Falling prices provide an opportunity to rethink this nonsense.

To paraphrase Rahm Emanuel, never let a period of cheap oil go to waste.


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