HomeTop storiesCalifornia's New Climate Plan Could Trigger Gas Price Rise

    California’s New Climate Plan Could Trigger Gas Price Rise

    California has always been at the forefront of climate action in the United States. The state is now working towards the goal of achieving carbon neutrality by 2045. To reach this target, the California Air Resources Board (CARB) has outlined a plan that proposes transitioning away from fossil fuels. However, this may come at a cost to consumers in the form of higher gas prices.

    A recent CARB staff report estimated that gasoline costs could increase by almost 50 cents per gallon over the next few years. This has prompted concerns from lawmakers and residents about the financial impact. The report and proposed changes will be discussed at an upcoming CARB hearing. Read this post till the end to learn more about the change and what it means to you.

    California Gas Price Hike

    Gov. Gavin Newsom’s Vision for Carbon Neutrality by 2045

    Governor Gavin Newsom has made tackling climate change a top priority for California. In 2020, he issued an executive order calling for the state to reach carbon neutrality by 2045 and net negative emissions thereafter. This goal will require eliminating fossil fuels and transitioning to renewable energy sources. Which in some way, is quite possible, according to him.

    Newsom hopes it will cement California’s global leadership on climate action. However, achieving carbon neutrality within 25 years will involve major changes to how Californians power their lives and get around. The transition away from gas-powered vehicles and toward electric ones will be a big part of the plan and they are working towards their goal.

    CARB’s Report Highlights Potential Gas Price Increases

    In a report released last September, CARB staff analyzed how strengthening the Low Carbon Fuel Standard to meet the state’s climate targets could impact gas prices. The report estimated that prices at the pump could rise by about 47 cents per gallon starting next year, with further annual increases.

    California Climate Plan Gas Price Rise

    By 2026, gas was projected to be 52 cents more expensive per gallon compared to today. Diesel prices could see an increase of 59 cents this year and 66 cents within two years according to the report. These higher costs for gasoline and diesel production would likely be passed on to consumers at the pump.

    • Projected long-term gas price increases from 2031-2046: $1.15 per gallon for gasoline and $1.50 per gallon for diesel.
    • Jet fuel could also be $1.21 more per gallon over the same long-term period according to CARB staff estimates.
    • The analysis aimed to show how fuel producers may respond to more stringent carbon reduction targets under the Low Carbon Fuel Standard.
    • Critics argue the potential hikes could disproportionately impact lower-income Californians and those in rural areas.

    Upcoming Gas Tax Hike Adds to Financial Pressure

    As if Californians didn’t already have enough to worry about with high inflation and living costs, an impending gas tax hike from the state will only compound their financial troubles. Starting this July, per state law the gas tax rate will rise by two cents to adjust for inflation. That means the price at the pump will climb from 59 cents per gallon to 61 cents.

    Gas Prices In Different States

    This translates to an extra 80 cents for a typical 15-gallon fill up. For those commuting long distances or relying on their vehicles for work, the extra cost will quickly add up. Lower-income residents in particular will feel increased strain on their household budgets from pumping more of their paychecks into their tanks. Which is somehow concerning to all.

    Historical Context: California’s Record High Gas Prices in 2022

    To understand why Californians view new potential gas price spikes with alarm, one need only look back to last year. In 2022, fuel costs in California reached an all-time high, with some areas breaching the $9 per gallon mark for regular unleaded. Mendocino County even saw prices flirt with $10 for several days running.

    These elevated rates represented a $3 premium over the rest of the country. High taxes, limited refinery capacity, and the state’s strict fuel blend requirements all contributed to California consistently featuring the most expensive gas nationwide. If another 50 cents per gallon hike is instituted, it threatens to push costs even deeper into unaffordability for many families and small businesses.

    California's New Climate Plan

    Final Words

    Facing potential price increases under the Low Carbon Fuel Standard, coupled with an inflation-driven state gas tax hike, leaves California motorists wondering how much more they can reasonably be expected to bear. Transitioning to a low-carbon economy will involve short-term costs, but state leaders must ensure the burden is shared equitably.

    Low-income residents struggling with the current high cost of living should not end up shouldering a disproportionate impact. As CARB finalizes its climate plan, balancing environmental priorities with economic fallout for ordinary people will be an ongoing challenge. Only by mitigating harmful consequences can the agency hope to build broad support for its ambitious emission reduction goals.

    You can keep visiting the Auto Freak website as we will keep this post updated with the latest and most recent news related to the California gas price hike. If you know something, then do share your views with us via the comments below.

    Must Read