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Low carbon fuel standard is bad for your wallet

Washington drivers already pay the second-highest combined state and federal gas tax in the nation – an eye-popping 67.8 cents per gallon – according to the American Petroleum Institute.

Now Governor Jay Inslee and some legislators want to impose another “hidden gas tax” on top of that already hefty price tag.  It’s called the Low Carbon Fuel Standard (LCFS), and it would require fuels produced and sold in Washington to meet a series of increasingly aggressive goals to reduce carbon emissions.

According to the California Energy Commission, the LCFS currently adds another 6.8 cents to the cost of California diesel fuel – and even as much as 9.5 cents to the cost per gallon of California gasoline.

Some experts say that’s an unrealistically low estimate.  Our industry’s experience with biodiesel supports those who predict the price tag will be higher.

But whether the number is 9.5 cents per gallon or something more, make no mistake:  the LCFS will drive up fuel prices paid by you, other families and small businesses all across Washington.

Several years ago, the state’s own Climate Legislative and Executive Workgroup (CLEW) concluded that the LCFS was one of the most expensive and least effective carbon reduction strategies available.  Governor Inslee is pushing the LCFS despite that finding.

At the same time, he also has introduced a carbon tax, which his own estimates say will add six to nine percent at the pump.  That’s an estimated 20 cents per gallon, according to the Washington Policy Center.

So, if both these policies were enacted, it’s not inconceivable that the combined impact of taxes and regulations would be as high as $1 per gallon.  Ask yourself whether you can afford that.

Beyond costs, there are other problems as well, beginning with whether compliance with an aggressive LCFS is even feasible.  Reducing the carbon-intensity of motor fuels depends on blending conventional fuels with alternative fuel stocks.  The problem is there are real questions regarding the availability and cost of these feedstocks.

A report by the University of California, Davis found that the blends necessary for LCFS compliance do not exist in commercial quantities and/or cost significantly more than conventional fuels.  The report states: “Because of the large degree of uncertainty regarding future compliance paths, there is concern that LCFS credit prices may become both costly and volatile.”

If the LCFS is implemented, it will harm Washington-based trucking firms.  Truckers from corporate long-haul operators will fuel up outside our state to avoid the extra cost.  But family-owned, local trucking firms will have no choice but to incur the cost, putting them at a competitive disadvantage.

In a business where our trucks may average only six to eight miles per gallon and our profit margins are slim, we cannot absorb this significant additional cost.  The expense will be passed on to our customers, who in turn will pass it along.  Since most things you buy spend time on one of our trucks, you can bet what you pay at the grocery store or the mall will be going up.

The impact of the LCFS will be felt not only in costs, but also in jobs.  The last time the LCFS was proposed, analysis by the National Federation of Independent Businesses estimated it could cost Washington 11,000 jobs.

The really sad thing is, despite the Governor’s rhetoric, the LCFS is completely unnecessary.  Washington families and business have already made great progress in reducing their carbon footprints.  Together, we have made Washington the 8th cleanest state in terms of carbon emissions per capita, and the 7th cleanest in emissions per gross domestic product.

We should be considering incentives to continue this good work, rather than pursuing a questionable policy that will take needed dollars out of the pockets of the hard-working families and small businesses of Washington.

Sheri Call is the Executive Vice President of the Washington Trucking Associations

*Note: The proposed LCFS legislation is not a proposal from the Governor. The LCFS is currently proposed in House Bill 2338 – sponsored by Representatives Fitzgibbon, Cody, Hudgins, Goodman, Tarleton, Santos, McBride, Stanford, Tharinger, Macri, Jinkins, Ormsby, and Doglio. The bill was heard in the House Environment Committee earlier this month.

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