Fuel prices in California hit historic highs this week, an unexpected price spike that has put the state’s dependence on oil and natural gas into sharp focus. Like many of the state’s former fuel price shocks caused by demonstrable events (i.e. foreign and domestic supply disruptions), oil companies are once again saying that refinery problems and pipeline issues were the root cause. However, most reports on the current price swing aren’t pinpointing the true reason – drivers en masse are too reliant on the current mix of gas and diesel, an energy source that pollutes our environment every time it is used.
The true cause of California’s fuel price spikes must be seen for what it is –an unhealthy dependence on fossil fuel (primarily imported), and lack of diversity in our transportation system. Furthermore, since over 50 percent of the oil used in the state is obtained from foreign sources, California consumers aren’t exactly benefitting the state’s economy as we send billions of dollars out-of-state but release combustion byproducts here – polluting our air and water. Over time, the impact of buying and burning all of that gas is going to get even worse: an increasing population and declining in-state oil production means we are going to import, and burn, more.
Growing fuel use and declining in-state production puts California on a path to spend between $112 and $182 billion per year by 2020 on imported energy, which translates to roughly $8,000 to $13,000 per household. Even worse, the American Lung Association, using EPA data, has included 9 cities and 16 counties in California on their list of most polluted areas in the country; more fuel burning will only exacerbate these problems, worsening air pollution and sickening people – leading to poorer public health, higher healthcare costs, and more missed work and school days.
California’s fuel and energy policies , if implemented as planned, have the ability to protect the economy and help lessen air pollution and human health impacts. By setting a cap on emissions and requiring a diversification of energy sources away from an over-reliance on fossil fuels, AB 32 will result in decreased dependence on foreign imports and will make California consumers less vulnerable to price shocks. Low carbon solutions such as advanced biofuels, ultra-efficient vehicles, and improved community planning are all part of the AB 32 solutions package, and all are aimed at breaking the grip that traditional fossil fuel companies have on our economy. Add to that the obvious environmental and health benefits from reducing fossil fuel use, and it is clear that the California Air Resources Board’s vision for AB 32 policies is the right choice for California.
For more information on how AB 32 saves California’s money during fuel price swings, see two articles co-authored by EDF economist Jamie Fine — Shockproofing Society: How California’s Global Warming Solutions Act (AB 32) Reduces the Economic Pain of Energy Price Shocks and The Upside Hedge Value of California’s Global Warming Policy Given Uncertain Future Oil Prices.