By Tim O'Connor and Shira Silver
Californians struggling with high gas prices should feel optimistic about the future. A new memo [PDF] by economists from EDF and Chuck Mason, a prominent economist at the University of Wyoming, demonstrates that policies established to reduce emissions and help the state reach its climate change goals also help to arm consumers at the pump.
The Low Carbon Fuel Standard, cap and trade, and other complementary policies such as Governor Brown’s Zero Emission Vehicle program and national Renewable Portfolio Standards seek to integrate lower or zero-carbon fuels into the energy market in an effort to reduce greenhouse gas pollution.
As our memo explains, in California these efforts also help to increase the market share for alternative, lower-carbon fuels. Between now and 2020, alternatives may grow to occupy between 15 and 24 percent of the market, creating new jobs and addressing the large market share that oil companies have in California.
Currently six oil companies control 94 percent of the fuels market in California. Through a set of mergers and other factors they have developed a strong lock on fuel in the state, and more specifically on consumers’ pocketbooks at the pump.
When alternative fuels enter the market, however, and establish themselves collectively as a ‘competitive fringe’ sector in the market, they could reach almost a quarter of the fuel market for cars and trucks. They have the potential to displace up to 3.7 billion gallons of gasoline a year.
Figure 1. Alternative fuels 2020 projections and market share
Alternative Fuel Type
Year 2020 Projected Volume
Volume of displaced gallons of gasoline in California in 2020 (per year)
% of fuel market share of cars and trucks in CA in 2020 (gasoline and diesel)
95 MM therms sold
15-35% new heavy duty trucks
199 million -221 million
1.6 billion-2.4 billion gallons
1.6 billion-2.4 billion
5% belend-15% blend into diesel
200 million-600 million
Electricity and hydrogen passenger vehicles
500,000-1,000,000 vehicles on the road
160.5 million-321 million
Total displaced gallons of gasoline:
2.3 billion-3.7 billion per year
Market share of alternative fuels:
With increased consumer choice from options such as natural gas vehicles, biodiesel and electric cars – overall consumer choice goes up and prices go down. This healthier market would result in fewer price spikes at the pump, and a more sustainable transportation system.
For the sake of our pocketbooks, we must continue to foster policies that help the environment, create jobs, spur new industries and reduce gas prices. Because in the end we could all use a little more green.