Walters: What will happen to gas prices if California shifts away from fossil fuels?

Vehicles are state's largest single source of greenhouse gases, and efforts to reduce emissions will hit motorists hard.

California’s taxes on gasoline, already among the nation’s highest, increased by another 1.7 cents per gallon last week. Republicans blamed Gov. Gavin Newsom for increasing the state’s sky-high living costs.

“Gavin Newsom just made living in California even more expensive by raising California’s gas tax once again while refusing California Republicans’ calls to suspend it,” Jessica Millan Patterson, state GOP chairwoman, said in a statement. “Californians continue to pay the highest gas prices and endure some of the worst roads in the nation.”

Newsom can be fairly criticized for many things he’s done or not done over the last five years, but this one is a bum rap. The tax increase was simply an annual inflationary adjustment by the state Department of Tax and Fee Administration, required by a law that predates Newsom’s governorship by many years.

The state’s most recent big jump in gas taxes occurred in 2017, when the Legislature passed a bill aimed at increasing revenues by $5 billion a year to finance highway improvements. Opponents tried to cancel the tax increase through a ballot measure the following year, but voters rejected the repeal.

The tax increase then and the inflationary adjustments since have pushed California’s total tax to nearly 70 cents per gallon — by most accounts the nation’s highest. Yet the state’s motorists still must contend with high levels of congestion and relatively poor pavement conditions.

As of 2020, California had the fourth worst roadway conditions of any state with just 67% of its 26,406 miles of pavement in “acceptable” condition, according to the federal Bureau of Transportation Statistics. Revenues from the gas-tax law are being spent to improve those conditions, but given the size of California’s roadway network and its long-neglected condition, it could be years before improvements become evident.

A more fundamental issue is what will happen to gasoline prices and gas tax revenues as the state attempts to wean Californians away from gasoline-powered cars and make zero-emission vehicles the norm.

Transportation, particularly autos and light trucks, is California’s largest single source of greenhouse gases as vehicles burn billions of gasoline each year. Therefore, reducing or eliminating those emissions is regarded as the key to achieving the state’s goal of carbon neutrality by 2045.

Last September, the California Air Resources Board published a report on the effects of intensifying adoption of its Low Carbon Fuel Standard program, which is aimed at providing “the economic incentives to produce cleaner fuels like electricity, hydrogen and biofuels that are needed to displace fossil fuels and reduce transportation sector emissions.”

The report describes the potential health and economic benefits of conversion, but also notes the costs to consumers during the transition, including sharp increases in the cost of gasoline.

It projects an immediate increase in gas prices of 47 cents per gallon from adoption of a revised program and then, “on average, from 2031 through 2046 the proposed amendments are projected to potentially increase the price of gasoline by $1.15 per gallon, potentially increase the price of diesel by $1.50 per gallon and fossil jet fuel by $1.21 per gallon.”

This is just an early projection of advancing the conversion, and is already undergoing revisions. So the eye-popping numbers are by no means inevitable, but it is a stark reminder that the massive effort to reduce greenhouse gas emissions in California won’t come cheap and motorists will be hit hard.

Also, it’s fair to say that the millions of Californians who already live in poverty or near-poverty and depend on cars to earn their livings will feel the impact most keenly.

Dan Walters is a CalMatters columnist.