Legislators introduce a bill to stop consumers from finding out about the new CO2 emissions tax
Key Findings
As lawmakers intended, Washington’s new tax on CO2 emissions is driving up the cost of gasoline, diesel and other fossil fuels.
By April, the tax on CO2 emissions had increased the price of gas by 39 cents per gallon, and increased the price of diesel by 47 cents per gallon.
Now some lawmakers want to stop consumers from learning about the tax, introducing SB 5766, which would ban petroleum companies from listing the cost of the tax separately on consumer invoices.
The proposal is undemocratic, it works against the purpose of a carbon tax, which is encourage consumers to choose other forms of energy.
If lawmakers think the tax on CO2 emissions that they imposed is too high, they have several ways to reducing the impact on consumers, without banning access to accurate information.
Introduction
As intended, Washington state’s new tax on CO2 emissions is increasing the price of gasoline, diesel and other fossil fuels. Some of the legislators who supported that tax increase, however, now want to prevent the public from learning about it. They have proposed a bill that would prevent fuel suppliers from making the cost of that tax clear to consumers.
The CO2 emissions tax is in addition the current federal gas tax of 18.3 cents per gallon and the state gas tax of 49.4 cents per gallon. The federal tax on diesel is 24.3 cents a gallon, plus a state tax of 49.4 cents a gallon.
The new carbon tax system requires companies that emit carbon to buy state-issued allowances to do so, paying a price determined by a public auction. The state’s first auction of CO2 allowances occurred at the end of February, with the average price reaching $48.50 per metric ton (MT) of carbon. We noted that at that price it would add about 39 cents to a gallon of gasoline and 47 cents per gallon for diesel for consumers at the pump.
Many fuel suppliers had been charging less than that for the first two months of the year because the actual price of the CO2 allowances wasn’t known. As a result, they appear to be increasing prices above the allowance price to recover the costs from undercharging during the first two months.
For example, invoices from British Petroleum (BP) show a line item for the state’s cap-and-trade CO2 tax – listed as “WA Cap at the Rack” – for diesel without the 5% biodiesel blend, of 56 cents per gallon, which translates to about $55 per MT of CO2. They also added 1.5 cents per gallon for the state’s new Low Carbon Fuel Standard.
BP is not alone in adding the cost of the CO2 tax. Other fuel suppliers, including those who sell propane, are increasing their costs in response to the tax. BP’s increase is notable, however, because the company lobbied for the CO2 tax.
