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California’s New Fuel Rules May Raise Gas Prices, Impact Uncertain

by Krystal

Starting July 1, two statewide changes could push gas prices higher across California, but how much they will rise remains uncertain, sparking political debate.

First, the state’s gas excise tax will increase from 59.6 cents to 61.2 cents per gallon. But the bigger question involves the Low Carbon Fuel Standard (LCFS), a program that encourages oil and gas companies to reduce emissions or buy credits from those who do.

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State Senate Minority Leader Brian Jones (R-San Diego) warned this will raise costs for companies, which will then pass those costs on to consumers. He cited a University of Pennsylvania study estimating gas prices could jump by as much as 65 cents per gallon in the near term. However, that figure is described as an “upper-bound estimate” and the actual impact could be much lower.

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Sam Wade from the Coalition for Renewable Natural Gas said predicting price changes is difficult. “Just as it’s hard to forecast oil prices, it’s hard to predict where credit prices will go,” Wade said.

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Wade added the program aims to reduce greenhouse gas emissions and improve air quality. “If you want cleaner air and to avoid climate damage like wildfires, you should support this program,” he said.

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The California Air Resources Board (CARB) pointed to a different estimate from the University of California-Davis, which predicts costs could add 5 to 8 cents per gallon. CARB said any price increase at the pump depends on how much oil companies decide to pass on to consumers.

Jones criticized the program, saying California already has the highest gas prices in the U.S., and accused CARB of trying to push people into electric vehicles and public transit. “Don’t you think we’ve gone too far?” he asked.

Wade responded that the LCFS is not the main reason for fuel price changes. “The cost is small compared to the environmental benefits,” he said.

As California balances environmental goals with economic concerns, the true impact on gas prices will become clearer in the coming months.

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