Tracking the Cost of AB-32 and Low Carbon Fuel Standards

The implementation of AB-32 is already increasing the price of fuel in California and LCFS is forecast to have a larger impact. My goal is to visualize the cost impact when LCFS becomes mandatory 1 Jan 2015.   The data sourcea are the fuel prices as posted on the Energy Information Administration web site.

This first chart shows West Coast Minus California (red) vs California (blue). 

CA+West Coast

This second chart is a zoom into the top right of the above chart above, to show the widening gap in more detail. 

CA+Western_Zoom

One of the issues is that Hawaii and Alaska are included in the PADD 5 cohort of prices, which is inflated by transportation costs. 

This chart shows PADD 4 which is the Rocky Mountain States: Colorado, Idaho, Montana, Utah, Wyoming (blue)  vs California Diesel prices (red).  I cannot compare PADD 4 gas prices as Rocky Mountain refiners do reformulate gas like refiners are forced to do in California. How ever diesel prices are comparable. Diesel prices will also be impacted by LCFS. 

chart-5 

Note:  This charts will be updated monthly under the CA Fuel Tab above, including a more detailed analysis of the data.  

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About Russ Steele

Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.
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18 Responses to Tracking the Cost of AB-32 and Low Carbon Fuel Standards

  1. Russ Steele says:

    From the Sac Bee

    Democratic fissures over California’s cap-and-trade mandates deepened on Thursday, with a key moderate Democrat introducing a bill to push back a looming rule expected to cause a spike in prices at the pump.

    Assembly Bill 69 by Assemblyman Henry Perea, D-Fresno, would delay for three years a rule requiring the energy industry to purchase permits for transportation fuels. Lawmakers and critics have been warning for months about a resulting price bump.

    California’s landmark emissions-reducing law, AB 32, erected a first-in-the-nation carbon permitting program. The cap-and-trade program allows industry to buy allowances offsetting the climate change-fueling greenhouse gases they pour into the air.

    The new system has already begun generating millions in revenue, with this year’s budget dedicating the new revenue stream to a mix of affordable housing, mass transit and the high-speed rail project championed by Gov. Jerry Brown. My emphasis.

    But the coming inclusion of transportation fuel into the program is threatening to push gas prices up, prompting alarm from pro-business Democrats. In a show of broad discontent, 16 Democrats last week sent a letter to the Air Resources Board urging the air quality regulator to delay implementing the new rule.

    Read more here: http://blogs.sacbee.com/capitolalertlatest/#storylink=cpy

    Even the Democrats see the problem, energy cost are gong to soar and they are going to be blamed for the increase.

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  2. “The 1979 (or second) oil crisis or oil shock occurred in the United States due to decreased oil output in the wake of the Iranian Revolution. Despite the fact that global oil supply decreased by only ~4%, widespread panic resulted, driving the price far higher than justified by supply. The price of crude oil rose to $39.50 per barrel over the next 12 months and long lines once again appeared at gas stations, as they had in the 1973 oil crisis.” Ben, during the second embargo was when I noticed because so many businesses went broke. I also noticed that the Federal Reserve manipulating bank interest rates also affected the economy up or down.

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    • Ben Emery says:

      Ok, Thanks Bonnie, sorry to hear about your business. I was only a kid but remember the odd and even days with the lines.

      That was a symptom of US led coup of the democratically elected Prime Minister in 1953 for nationalizing their oil. We put in a puppet regime that annoyed the religious extremists to the point of revolution. We have had a part in the key “enemies” of the United States for at least 80 years around the world if not longer. We put in corporate friendly dictators who then feel bravado after a few years and then turn against the US corporate interests.

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      • Todd Juvinall says:

        My goodness Ben Emery, you blame America for everything. Why arte you such a self hater?

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      • Ben Emery says:

        Todd,
        It’s called history, you might try reading some of it sometime.

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      • Ben Emery says:

        Todd,
        This is a response to your final post to me at your blog. Do you really not see how your culpable in the dialogues that take place with those you disagree with? You like to claim all libs talk to you the same, when all anything does positive/ negative towards you usually you are good or you are the problem.

        Sorry Russ and this will be the last comment to Todd ever unless he does something way over the top that can’t be ignored.

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    • Todd Juvinall says:

      I am way more educated on history than you Ben Emery. You are a DailyKos self hater and I am a well rounded man who reads all kinds of history.

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  3. Ben Emery says:

    Russ,
    Can I assume you will have a self adjusting graph of how much less carbon is being emitted into the atmosphere due to the policy shifts as well. The bottom line doesn’t mean much when we can’t grow food due to heat waves and droughts now does it? Waiting for the disaster to happen is the dumbest way to mitigate the effects of climate change.

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    • Russ Steele says:

      Ben,

      Your are assuming that there is a connection between CO2 and catastrophic warming, which does not exist. Yes, when CO2 reaches 500ppm we could see a total 2C degree increase in temperature, assuming that everything is constant. But, nothing is constant, there are orbital changes, axial changes, PDO and AMO going negative changes, and the return of a Grand Solar Minimum, etc. It is important to study the ice core data to see how the climate has evolved and changed over millions of years.

      You are assuming that heat waves and droughts are exclusively related. When you look at the historical climate records many sever droughts came during cool or cold periods. Why, because cold air decreases evaporation over the ocean, thus there is less moisture in the air to be squeezed out when the air is force to rise up mountain slopes. As the plant warms, there is a higher probability of flooding, not droughts.

      Finally, you are assuming that California’s AB-32 and LCFS will have any impact on the global climate. It will be so small that it is unmeasurable. We are limiting our economic growth for no environmental benefit. The US CO2 emissions have gone down, as fracking reduce the cost of natural gas and power plants are switching from coal to natural gas. With so many people with out jobs and leaving the labor force, they are not driving to work, or driving anywhere for that matter, and auto emissions are falling.

      AB-32 and the companion LCFS are going to severely restrain California’s economic recovery.

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      • Ben Emery says:

        Russ,
        Will you have a graph showing the reduction in carbon emissions due to the policy? Myth or not a myth has nothing to do with my question. How much less carbon will be emitted because of AB-32?

        There are many factors that go into fuel prices, the biggest one is the energy industry is a bunch of shysters. Just giving an example like you gave for the reduction of carbon.

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      • Russ Steele says:

        I will look a see if the CARB has a graphic for anthropogenic contribution, which for the whole planet is less than 1% of the total. The CA number maybe too small to be calculated. Some where I read that it was smaller than instrument tolerances. I will do more research and see what I can find.

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      • Ben Emery says:

        Thanks Russ,
        I will save a long post of why it is important because I know you emphatically disagree.

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      • Russ Steele says:

        Please cite your sources.

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  4. Ben Emery says:

    Bonnie,
    I think you are having selective memory. It was Nixon that started monkeying with the cost of gas not Carter.
    http://www.washingtontimes.com/news/2006/may/15/20060515-122820-6110r/?page=all

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  5. Sean says:

    As a chemist, my biggest problem with the low carbon fuel standard is just what is it? From what I can gather, it’s as much about pedigree of a product as anything else. If you look at the chart on this link, http://en.wikipedia.org/wiki/Low-carbon_fuel_standard#mediaviewer/File:BioethanolsCountryOfOrigin.jpg, you can see that for something as simple as bio-ethanol, the sugar derived product can have a value that ranges from 18 for Brazilian sugarcane ethanol to 107 for Pakistan sugarcane ethanol. (Lower numbers are better. Gasoline has a value of 85 and diesel 86 for a point of reference.) Corn based ethanol in the US has a value of 103 but corn based ethanol from France is 49 (using nuclear energy to process??). For ethanol, this could lead to a huge shell game based on pedigree. It is likely that the Brazilian ethanol will have greater value in California as a blending fuel than it does almost anywhere else. California fuel blenders may pay a big premium for Brazilian ethanol’s low carbon pedigree and any shortages created by large volume imported by the Golden State will likely be made up by corn based ethanol suppliers in the Midwest going back to Brazil or its other customers.
    Pacific Ethanol is a leading biofuel refiner in California that also has plants in Idaho and Oregon. They will be using sugar from sugar beets in Idaho as part of their feedstock and I expect that with Idaho getting 58% of its electricity from hydroelectric and Oregon 70%, the LCFS is doing nothing more than shopping for low cost non-fossil fuel power. Ironically, low cost hydroelectric power going to ethanol producers in Oregon and Idaho may make it more expensive for non-fossil fueled electricity generation imported to CA from out of state.
    The only really practical solution for low carbon fuel standard is natural gas. This requires very high pressure tanks that can increase the cost of a vehicle by $10K or more.
    From what I’ve read, California is the only state that has the low carbon fuel standard. Not even the EPA is willing to push this mess on the American people. It will be interesting to see how the LCFS game pans out. (I predict it will be more of a game than an industrial process.)

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  6. Dena says:

    Fuel can be had in Phoenix for about $3.50 a gallon. Phoenix fuel is a mix of California and Texas fuel so I suspect we are getting more from Texas and less from California at the moment.

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  7. There was a time when all this would have been considered interfering with commerce… Also when Carter was President I became aware of the fact that when the government tampers with the cost of fuel that runs the economy it’s undermining the economy and all the people it claims to care about.

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