Will California's new low-carbon fuel standards raise gas prices?

California has enacted numerous policies to cut transportation-related emissions, improve energy efficiency, and reduce the use of fossil fuels. One such policy--the state's Low-Carbon Fuel Standard, or LCFS--is not sitting well with oil companies, which claim the regulation will raise the price of gasoline.

Toby Talbot/AP/File
A customer fills up at a gas pump in Montpelier, Vt. A new report claims that concerns about rising gas prices in California are overblown, saying any increases in transportation costs will be offset by savings from decreased oil consumption.

When it comes to green transportation policies, California leads the way.

The state has enacted numerous policies to cut transportation-related emissions, improve energy efficiency, and in some cases eliminate the use of fossil fuel.

One such policy--the state's Low-Carbon Fuel Standard, or LCFS--is not sitting well with oil companies, which claim the regulation will raise the price of gasoline, harming consumers.

Now the LCFS has received a ringing endorsement from the Union of Concerned Scientists (UCS), which is attempting to add some context to the fears of higher gasoline prices for Californians and sticker shock at the pump.

new report (pdf) by the group claims that concerns about rising gas prices are overblown, saying any increases in transportation costs will be offset by savings from decreased oil consumption.

Analysts looked at the anticipated costs of the California policies, and concluded that the average consumer will still save money by using less fuel.

According to the UCS analysis, a California driver who purchases a new car in 2015 will save an average of $3.90 a week on gas costs compared to a driver who purchased a new vehicle in 2008, before many current standards took effect.

California Assembly Bill 32--which seeks to lower global-warming pollution to 1990 levels by 2020 through mandatory emissions reporting and other regulations--did not take effect until late that year.

The LCFS was established by then-Governor Arnold Schwarzenegger in 2007 to reduce the carbon-intensity of transportation fuels by 10 percent over the same period, but its provisions did not come into force until 2011.

The UCS report suggests that savings associated with these policies could add up to as much as $3,000 over the 15-year life of a typical vehicle.

By 2020, savings are expected to increase to an average of $5.20 a week--or more than $4,000 over the life of the average car--while new-car buyers in 2025 could save $9.00 each week, equivalent to $7,000 over the life of car.

As more-efficient cars then enter the used-vehicle market, UCS analysts note, their benefits will extend to more California drivers.

A 10-year-old used car in 2025 will save its driver $400, compared to a similar car in 2015, the report says.

The UCS suggests that oil companies and lawmakers focus far too much on potential changes to fuel costs, rather than the long-term savings from using less fuel.

That position, however, begs the question of whether consumers will take a similarly long-term view if confronted with higher prices per gallon at the pump.

Sure, their car may be more fuel-efficient--but will they be able to do the math if they see a higher price per gallon, and a higher total each time they fill up?

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