Analysis finds Washington drivers could continue to see rise in gas prices after new law in 2023

A potentially dramatic hike in the cost of gasoline has Gov. Jay Inslee at odds with an analysis released Tuesday by the conservative-leaning Washington Policy Center (WPC).

According to the WPC, drivers could see a hike of $0.46 a gallon and $0.56 a gallon for diesel next year.

Starting Jan.1, many companies that emit carbon dioxide gas will be charged a carbon offset fee based on the amount of CO2 emissions they create. The more emissions, the higher the fee.

When $6 a gallon for gas is no longer abnormal, the political gambit there is how much of the carbon emission tax will be passed onto the consumer. 

The Climate Commitment Act passed by the Democratically-led legislature and signed by the Governor in 2021 goes into effect on Jan. 1, 2023. 

Under the Climate Commitment Act passed earlier this year, the Department of Ecology must set up a cap-and-invest program by 2023. That program will set a statewide cap on greenhouse gas emissions, and then gradually reduce the cap to match the emission limits set in state law, Ecology said. 

The law requires businesses and organizations that produce more than 25,000 tons of greenhouse gases a year to obtain emissions allowances for their total emissions. The law is supposed to take the money from those companies paying to emit CO2 gas and put it into the state's general fund spending. 

Drivers will also be paying the country’s second-highest gas tax of $0.49 a gallon when the law goes into effect.

"We in Washington now have one of the best caps and invest bills, which will actually give us cleaner air and invest dollars in building jobs in the state of Washington," Inslee told FOX 13 News.

The law is similar to ‘cap and trade’ that’s been in effect in California since 2013. Washington calls it "cap and invest."

"The political rhetoric is to call it ‘cap and invest’ because they take the taxes, and then they spend it," says Todd Myers, the Environmental Director for the Washington Policy Center.

Washington voters have twice rejected similar cap and invest initiatives. Critics claimed it would have led to higher gasoline prices with the cost of ‘cap and invest’ passed to the consumers by the companies who have to pay it.

Inslee told FOX 13 that the cost to consumers will be minimal.

"This is going to have a minimal impact if any. Pennies. We are talking about pennies," the Governor said. "Potentially, not all of this would be passed off to the consumer and what they would (pass on), would be pennies."

But Myers used the same Department of Ecology report that the Governor cites for his pennies remarks, for his analysis.

"If you look at his own department's study and the intent of his law, it is to drive gas prices up, so gas use goes down, and we would produce less CO2," says Myers.

Myers concluded the cost of carbon offsets at a rate of $20.60 per metric ton of carbon emissions would equate to $0.46 for every gallon of gas produced.

He says the added cost to a gallon of gas will increase as the cost of carbon emissions goes up. In 2030, he predicts it will be $0.80 a gallon for gas, and $0.97 for a gallon of diesel.

Unfortunately, the report doesn’t provide an apples-to-apples comparison. Instead, it uses potential percentage increases in the cost of fuel.

It says ‘cap and invest’ could increase fuel prices between 1.22% to 1.50% in 2030; 0.33% to 0.50% in 2040; and 0.14% to 0.30% by 2050.

It’s numbers that tend to justify the Governor’s pennies remarks, but Myer says the Department of Ecology report assumes high gas prices and other variables involved.

When FOX 13 asked the Governor if he plans to tell the people of Washington, that they could expect higher gas prices as a result of the emission tax, Inslee said, "that’s not true, they are not going to see much higher gas prices-- maybe even lower than they are today."

"Look, the people causing the extraordinary gas prices are the gas and oil companies, they control the price, not me" Inslee said.

"When the Governor says it’s not a tax and we are not increasing gas prices, that’s simply not accurate," says Myers.

Myers points to the California CO2 emission cap and trade costs to consumers.  Published reports estimate California’s emission ‘cap and trade’ is adding an additional $0.19 to a gallon of gas.

It’s an estimate because oil and gas companies are not required to report how much of ‘cap and trade’ is added into the price of gas.

California consistently has the highest gas prices of any state in the country.

"He wants people to pay more at the pump so they use less gasoline, that’s not an ancillary part of the law, that's the goal of the law," says Myers,

‘Cap and invest’ will soon become a cost of doing for business in Washington state, not just for oil and gas companies, but any manufacturer that produces greenhouse gasses with few exceptions. One of the exceptions is public utility companies.

"The last people you should trust on gas prices are the gas and oil companies," the Inslee told FOX 13. "They’ve got the foot on the neck of drivers of Washington state and I’m not happy about it."