What could happen to gas prices and taxes if California changes from fossil fuels?

    <aside>         <div class="newspack-popup-container newspack-popup hidden  newspack-inline-popup     ca-voices-intro" role="button" tabindex="0" style="background-color:#fafafa;color:#000" id="id_425617" data-segments="" data-frequency="0,0,0,month">

California’s gasoline taxes, which are already some of the highest in the country, recently increased by 1.7 cents per gallon. The state’s Republicans criticized Governor Gavin Newsom for contributing to the high cost of living in the state through this tax hike.

State GOP Chairwoman, Jessica Millan Patterson, asserted, “Gavin Newsom just made living in California even more expensive by raising California’s gas tax once again while refusing California Republicans’ calls to suspend it. Californians continue to pay the highest gas prices and endure some of the worst roads in the nation.”

It should be noted that this tax increase was a routine adjustment for inflation by the state Department of Tax and Fee Administration, mandated by a law established long before Newsom took office.

The most significant increase in gas taxes in recent years was in 2017 when the Legislature passed a bill to generate an additional $5 billion annually for highway enhancements. Despite opposition and attempts to repeal the tax increase through a ballot measure, it was upheld by voters.

The cumulative effect of these tax increases and adjustments has raised California’s total tax to nearly 70 cents per gallon, making it the highest in the nation. Even with these high taxes, California’s drivers still face challenges such as heavy traffic and subpar road conditions.

By 2020, California ranked fourth in the nation for poor road conditions, with only 67% of its 26,406 miles of pavement deemed “acceptable” by the federal Bureau of Transportation Statistics. Revenues from the gas tax law are being utilized to improve road conditions, but given the extensive network of roads in California and their long neglect, visible improvements might take years to materialize.

An important consideration is how gas prices and gas tax revenues will be affected as California endeavors to transition away from gasoline-powered vehicles and promote the adoption of zero-emission vehicles.

Transportation, especially cars and light trucks, accounts for the largest share of greenhouse gas emissions in California due to the substantial amount of gasoline consumed annually by vehicles. Therefore, reducing or eliminating these emissions is crucial for reaching the state’s target of carbon neutrality by 2045.

Last September, the California Air Resources Board released a report on the impact of accelerating the adoption of its Low Carbon Fuel Standard program, which aims to incentivize the production of cleaner fuels like electricity, hydrogen, and biofuels to replace fossil fuels and reduce emissions in the transportation sector.

The report outlines the potential health and economic advantages of this transition but also acknowledges the costs to consumers during this shift, including significant increases in gasoline prices.

It predicts an immediate 47-cent per gallon increase in gas prices upon implementing a revised program and projects potential price increases between 2031 and 2046 as part of the proposed amendments.

The estimated cost increase is $1.15 per gallon of gas, a potential rise of $1.50 per gallon for diesel, and a possible increase of $1.21 per gallon for fossil jet fuel. These figures are preliminary and subject to change. However, they highlight the significant financial implications of California’s efforts to reduce greenhouse gas emissions – an initiative that will likely have a significant impact on motorists.

It’s important to note that those living in poverty or near-poverty in California, who rely on cars for their livelihoods, will likely be disproportionately affected by these price hikes.

source