Report: California Gasoline No Longer the Most Expensive

Washington has officially managed to surpass California as the state with the highest fuel prices and looks as though it’s on track to compete for that dubious honor indefinitely. 

Based upon data tabulated by the American Automobile Association (AAA), unleaded gasoline purchases in Washington jumped by 32 cents over the past month to $4.93 a gallon. The national average is presently $3.58 per gallon.

Despite California historically being America’s most expensive state in which to buy a gallon of fuel, other regions occasionally manage to swipe the title away. But this is usually due to unforeseen supply problems and typically pertains to Hawaii — which sources more of its fuel from the Eastern Hemisphere than the rest of the United States and has less room to store it.

Washington’s fuel pricing isn’t a matter of it being isolated in the middle of the ocean. Earlier this year, the state introduced a new carbon-pricing program (part of the Climate Commitment Act, and Clean Fuel Standard) that fines businesses for any greenhouse gas they emit. The scheme is supposed to spur competitive environmentalism while raking in a bunch of money for the government. But it’s starting to look like companies are just raising their prices to offset the new green fees.

According to The Seattle Times, the first two quarterly auctions of Washington’s emission allowances hauled in more than $850 million. But energy companies weren’t interested in their profits taking a hit and have responded in a predictable manner.

From The Seattle Times:

Now oil companies are choosing to pass on the compliance fees, the experts say. Those costs add up to about 50 cents per gallon for the consumer, according to the Oil Price Information Service, a Dow Jones company that collects fuel-pricing information for many clients, including AAA. The state Department of Ecology, which oversees the carbon-pricing program, says it’s aware of oil companies passing on the costs but has no power to stop it.

Gas prices are still lower than the inflation-plagued summer months last year, but the spike has bolstered the arguments of conservative think tanks and trade organizations representing fuel companies that are running public-messaging campaigns calling the compliance fees a tax. Some are calling for the repeal of the climate legislation altogether.

Gov. Jay Inslee’s office said it is too soon to accurately assess the price impact of the state’s climate policies. “No one would be surprised, however, if oil companies experiencing record profits are choosing to pass their compliance costs to customers — sometimes even for fuels that are exempt under the law,” said Jaime Smith, Inslee’s executive director of communications, in a written statement.

Whether or not Big Oil’s response was obvious, it doesn’t change the fact that another so-called climate initiative has resulted in consumers spending more of their money. We can bicker about whether or not the state’s carbon-pricing scheme can be formally considered a tax, what its original intent was, and how the equally unhelpful political parties are handling things. The Seattle Times goes on to say climate change is decimating Washington’s salmon population, degrading the air quality, and worsening seasonal wildfires. Others would argue those are the result of regional mismanagement. But the bottom line is that energy companies are simply shrugging at the state’s regulatory efforts and demanding more money per gallon of product.

Washington and Oregon are neighboring states and have enjoyed similar fuel prices throughout most of history. But the former began seeing its energy prices break away roughly a decade ago with a dramatic jump witnessed at the start of 2023. The Oil Price Information Service estimates Washington’s new carbon regulations now tally a fee of about 50 cents per gallon of gasoline — up from 37 cents per gallon in the first quarter of this year.

Oil companies aren't even trying to keep this a secret. Allowances are tradable, allowing wealthy businesses to effectively buy the right to pollute more than their rivals. But the industry has also announced it would be instituting a fee on fuel sales for costs incurred by trying to comply with Wahsington’s new regulatory scheme.

This likely means that Washington boasting higher fuel prices than California won’t be an isolated event. The two states will probably be in competition for years to come as they continue to introduce environmental policies that will lead to oil producers raising their prices in an effort to remain ludicrously profitable.

While the Golden State still averages higher prices in its urban hubs, Seattle has settled in at $5.09 for a gallon of regular gasoline. CNN also reported that Washington’s Skamania County presently averages $5.32 a gallon, which is trending higher than just about everywhere else in the country.

“We’re like six months in,” said Claire Boyte-White, a spokesperson for Washington’s Department of Ecology, “and yes, oil companies started increasing their prices in January, long before they had even a chance to pay for anything [in the new carbon-pricing program].”

Of course, leadership suggested the scheme would have little-to-no impact on fuel pricing before it was implemented.

“This is going to have a minimal impact, if any. Pennies. We are talking about pennies,” Governor Inslee said in 2022. “Potentially, not all of this would be passed off to the consumer, and what they would [pass on] would be pennies.”

The matter is now being framed as wholly political. Conservatives are being accused of helping the oil industry by favoring deregulation and Democrats are being accused of championing government intervention that will ultimately encourage the energy sector to raise its prices.

[Image: Michael Vi/Shutterstock]

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