Gas prices in the state of Washington have surged 40 cents since the new year, just as a new law designed to penalize greenhouse gas emissions went into effect, according to the U.S. Department of Energy’s Energy Information Administration (EIA).
Washington businesses that produce more than 25,000 metric tons of carbon dioxide emissions per year will either need to purchase allowances from the state’s Department of Ecology at quarterly auctions or trade for them with another business later, a practice commonly known as “cap-and-trade,” Axios reported. Since the law was implemented, the cost of gas in the state has skyrocketed from nearly $3.70 to just over $4.10, according to the EIA.
The final cost of the allowances will be announced March 7, and will be determined by the results of the state’s first auction, hosted Tuesday, Axios reported. The state legislature anticipates that the allowance program will generate more than $1.7 billion through 2024, which will be reinvested into efforts to reduce greenhouse gasses, The Washington Post reported.
“Whatever the cost, fuel distributors are liable for the cost of allowances for fuel they’ve already sold in the first two months of the year,” Todd Myers, director of the Center for the Environment at the Seattle-based think tank Washington Policy Center, said in a Feb. 23 blog post. “The price being charged is a guess on the part of fuel distributors because although the law took effect at the beginning of the year, the Department of Ecology was not able to put the auction system in place on time.”
Discounting California, the average price of gas in Washington is more than 27 cents higher than the rest of the West Coast, which is defined as Oregon, Washington, Oregon, Nevada, Arizona, Alaska and Hawaii, the EIA reported. The average price of a gallon of gas in California, which also has a cap-and-trade law, is more than $4.58 at time of writing.
Fuel suppliers will not incur any compliance obligations until November, 2024, so any surcharge on fuel is “strictly a decision made by fuel suppliers,” the Department of Ecology said in a January FAQ. The department said it was “not true” to consider the new law a tax on gasoline “although there may be costs of compliance for regulated entities associated with the program.”
“The Washington legislature has never had the opportunity to invest this amount of money in climate and clean energy,” Kelly Hall, Washington state director for nonprofit energy transition advocacy group Climate Solutions, told the Post. “So this is a really exciting opportunity.”
The Washington Department of Ecology and Department of Revenue did not immediately respond to a Daily Caller News Foundation request for comment.
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact email@example.com.