Transportation Diversification is Key to Fixing California’s Gas Price and Pollution Woes

This summer I had the unique opportunity to drive with members of the California state legislature through their districts in Los Angeles and the Central Valley. In addition to brown lawns, hazy air, and intense heat, we were reminded of California’s persistently high gas prices on filling station signs at nearly every major intersection.

Fuel hoses from a gas station. Source: Flickr/Boegh

Fuel hoses from a gas station. Source: Flickr/Boegh

As we drove through many neighborhoods struggling to pull themselves up economically, the need for solutions was clear. Since lower-income households pay the same amount per gallon as people in more affluent neighborhoods, low-income households tend to devote a greater percentage of their monthly income toward fuel purchases. Furthermore, since new and more efficient cars are usually more expensive, low-income households tend to drive older, less efficient vehicles that use more gas and release more pollution. So, while families across California are cutting back on things like watering their lawns, they are forced to spend a lot of these savings filling up their cars, while also breathing some of the most polluted air in the nation.

Fortunately, there is a solution at California’s fingertips that will tackle the issues of gas prices and pollution at the same time: transportation diversification. This simply means providing all Californians with choices on how to get where they need to go. These choices can take the form of alternatives to gas and diesel, alternatives to inefficient vehicles, and alternatives to cars all together. By providing these choices, consumers can pick what works for them – allowing the entire transportation system to better meet people’s unique needs and budgets.

The status quo is unsustainable and will yield even higher prices and greater harm to consumers in the long term

California cannot afford to maintain the status quo – a system where practically everyone drives either a car or truck powered by gas or diesel. In this scenario, Californians continue to buy 15 to 17 billion gallons of fuel a year, over half of which comes from imported oil.

Since the largest impact on the price at the pump is the international price of oil, keeping the status quo means California consumers will continue to be affected by decisions and unrest occurring in places like the Middle East, South America, and Canada. What’s more, due to increasing international demand for gasoline and diesel, and a shift toward dirtier crude oil to produce fuel, all signs point to higher long-term prices and more pollution. Put simply: according to almost every expert analysis from state, federal, and international agencies, the trend on gas prices is upwards – meaning more pain at the pump for California residents if steps aren’t taken to build in needed solutions.

Transportation diversification will yield lower prices and improve the health of California communities

As described in a July 2014 letter signed by 74 economic and energy economists, transportation diversification will likely cause fuel prices – including prices for gasoline and diesel – to decrease in the long term helping Californians break out of the status quo spiral that is both expensive and unhealthy. More transportation options mean consumers will be less affected if the price of any one type of fuel unexpectedly goes up, protecting the larger economy from price spikes that can undermine economic growth and devastate poor communities. As more fuel efficient vehicles, lower carbon fuels, and better transit options are deployed in communities across the state, all Californians, and in particular low-income communities, will gain more control over their finances and mobility.

Diversifying transportation will also lead to decreased toxins in the air, a subject Californians know all too much about and which severely harms the health of our children and elderly. Through the introduction of clean alternatives, such as vehicles that don’t require combustion, California can get relief from the status quo where nearly every vehicle has a tailpipe responsible for thousands of pounds of pollution every year.

California’s roadmap to transportation diversification has been written, and the wheels are starting to turn

Thanks to the efforts of leaders in California government, the state has already taken the first steps toward transportation diversification though the passage and implementation of clean cars standards, the AB 32 Low Carbon Fuel Standard (LCFS), and a comprehensive cap-and-trade regulation.

These programs deliver on transportation diversification by creating incentives to bring new choices to consumers. For example, clean cars standards require auto-makers to provide more efficient and alternative fuel vehicles to the market. The LCFS, on the other hand, brings alternative fuels to consumers through a flexible regulatory mechanism that rewards clean fuel providers based on how much they sell. Cap and trade, by placing a price on carbon pollution across the entire economy, creates an incentive for both fuel providers and fuel users to find the cheapest and most effective ways to cut carbon pollution. This includes options that diversify the fuel mix with biogas, electricity, hydrogen, or renewable diesel. Cap and trade also provides investment money to develop alternatives like mass transit and reduce the cost of higher efficiency vehicles.

California is making real progress towards transportation diversification every day. Over the last five years, California’s policies have helped move the state from three percent diversification to eight percent (as measured by the share of alternative fuels in the overall market). By 2020, projections are for this number to double.

In my time driving around with some of the state’s most influential officials, it was clear that their top priority is delivering real benefits to their constituents. By supporting policies that are building a diversified transportation system, all Californians will have more choices – saving both money and lives. This is a framework that any public official should be able to support.

This entry was posted in Cap and trade, Clean Energy, Climate, Global Warming Solutions Act: AB 32, Low Carbon Fuel Standard, Transportation. Bookmark the permalink. Both comments and trackbacks are currently closed.

One Comment

  1. Posted August 20, 2014 at 9:32 am | Permalink

    I think that transportation diversification is a useful objective, but achieving that will be difficult due to the network externalities inherent in transportation technologies. Gasoline and diesel vehicles became dominant because having single-fuel refueling networks is more cost effective, and reduce the search costs for drivers to find those stations. Think of how many fueling stations someone might have to pass to reach their particular energy source. Investing in a particular fuel requires a certain level of revenue. Note how many local gas stations have closed because they didn't have enough sales.

    For a more recent example, we can look at cell phone operating systems. Initially each manufacturer had their own system, but now virtually all phones are driven by two systems, Android and iOS, while Windows 8 keeps trying to make inroads.

    We need to be very aware of the fueling network economics when pushing for new transportation energy sources. Investing in a system is as much a set of business decisions as a policy decision. One approach might be to focus on using particular fuels in a narrow set of sectors and discourage broad sector-wide use. Another might be to use a geographic focus and to set up means of interconnecting across those geographies.

One Trackback

  • By M.Cubed: Outside the Box on August 20, 2014 at 9:40 am

    […] O'Connor of EDF writes about the benefits of transportation diversification at EDF's California Dream 2.0. I think that fuel diversity is a useful objective, but achieving that will be difficult due to […]