New Carbon Regulations Could Raise Fuel Costs

Oct 14, 2009

A recent examination of federal legislation directed at curbing carbon emissions projects that if the measures were to pass, the price of gasoline could rise by 15 cents per gallon on average between 2012 and 2019.


The research firm Point Carbon conducted a study of the carbon dioxide emission control provisions included in theKerry-Boxer Senate bill.  The bill takes copiously from theWaxman-Markey bill passed earlier this year in the House of Representatives, and states that a proposed cap-and-trade program for emissions would cost companies $15 per ton.


Point Carbon analyst Lisa Zelljadt told FleetOwner magazine that while trucking companies would not be subject to the emissions restrictions under the proposed plan, gasoline and diesel refineries would be.  That means that the added cost of carbon emission allowances would inevitably be passed on to customers in the United States in the form of price hikes on fuel.


“Our breakdown of carbon-allowance pricing shows that $10 per ton equates to roughly a 10 cent per gallon increase for gasoline; an increase that would be roughly the same for diesel fuel,” she explained. “However, as you get on average more miles per gallon from diesel fuel compared to gasoline, that price increase due to any carbon allowance pass-through might be slightly less.”


However, Point Carbon is forecasting an average price of $15 per metric ton when the program would become active between 2012 and 2019. In turn, gasoline could rise by 15 cents per gallon from market price, with chances of a slightly lower price hike for diesel.


Photo courtesy of AgentAkit under the Creative Commons License.