Supposed Inslee allies continue to contradict his cap-and-trade claims

Supposed Inslee allies continue to contradict his cap-and-trade claims

When Gov. Jay Inslee was working to pass his cap-and-trade gas tax, he said the cost to consumers would be negligible – despite experts predicting otherwise. Now that those predictions have come to pass, he’s trying to blame everyone but himself. Unfortunately for him, it’s hard to pass the buck when even his allies agree the tax is to blame – and some even say that was the point. 

Severin Borenstein, a UC Berkeley professor and expert in cap-and-trade policy, served on the committee which created California’s cap-and-trade program. The program launched in 2012 and served as the model for Washington’s program. As far back as 2014, he was predicting that the program would raise gas prices in California – the only question was how much. 

In fact, Borenstein wrote, ”Every economic analysis of cap and trade I have ever seen – whether left, right or center politically… recognizes that it will raise the cost of selling gasoline and that this increase will be passed along to consumers. That isn’t due to some conspiracy. It’s how markets work; when the marginal cost of selling a good goes up, firms raise their prices.” 

He continued, “Robust debate is valuable, but that debate is undermined when the public is told either that this change won’t (or shouldn’t) cost them anything.” That’s exactly what Inslee is doing.

Since the cap-and-trade law that has increased the price of gas took effect in Washington, Borenstein has agreed that is the case there as well. It’s a simple calculation. “Let’s say the price of the tradable allowances in Washington is $50,” Borenstein said. “As I recall, it’s pretty close to 50. A gallon of gasoline produces about 1/100 of a metric ton of greenhouse gases, which makes the math really easy. So, $50 per ton, means the price of gasoline goes up about 50 cents per gallon.”

This is not an issue of political spin – it’s one of a basic understanding of markets. Borenstein is an award-winning economist and expert in public utilities who has worked with the California Board of Governors, the Obama administration, and other groups that are not natural allies with oil companies.

It’s not just gas prices either. This program is starting to lead to increases in residential energy bills as well.

Earlier this month, the Utilities Transportation Commission – whose three members are appointed by Gov. Inslee – approved a request from Puget Sound Energy (PSE) to increase customer bills 3% explicitly to cover what “PSE needs to comply with the Cap and Invest Program.” 

Regardless of what your energy bill is now, that 3% is a lot more than “pennies.” And that’s on top of already increasing energy prices. 

To head-off the concern customers are likely to have from seeing their bills increase, PSE requested adding a line item for the exact monetary impact the Cap and Invest Program has on their bill. But the UTC rejected that request because it would be “confusing.”

However, low-income families will see a line item for a “carbon reduction credit,” which essentially negates the 3 percent surcharge. Such customers will see bills that very much seem like the Cap and Invest Program is leading to cheaper energy. Incredibly, this isn’t at all “confusing” in the eyes of the UTC.

Some of Inslee’s allies on the environmental front are far more honest about the price increase. 

The organization Climate Solutions, which supports cap-and-trade policies, openly wants higher gas prices. Policy Director Claire Boyte-White said a prime motivation for the policy is to make gas unaffordable to force people off fossil fuels. She went on to call the inevitable rise in prices “the point of this policy.”

People across the political and ideological spectrum agree that Islee’s policy is to blame for record-high gas and energy prices, despite the governor’s arguments to the contrary. When all of the experts agree, it’s time to listen. 

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!