Written by Robert Silva
My community can’t afford the uncontrolled cost increases that the California Air Resources Board (ARB) is proposing. Last year, our State Legislature passed legislation to rein in the costs posed by California’s climate program while still achieving reductions in emissions. But ARB, which is charged with carrying out the legislation, is ignoring the cost containment part of the mandate.
Instead, ARB is proposing a revised cap-and-trade program that forces Californians to pay more for gasoline, utilities, food and other essentials. These cost increases hurt everybody, but they especially impact low-income families, for whom these necessities make up a bigger part of the household budget. Many families in the City of Mendota will be pushed over the brink by these reckless cost increases.
Cap-and-trade reduces carbon emissions by requiring businesses to purchase an “allowance” for each ton of carbon they emit, with a declining “cap” on the total number of allowances available. As the cap declines, the price of allowances can shoot up dramatically, imposing sharp costs on businesses, which are then passed down to consumers.
ARB’s own experts have already determined cap-and-trade increases the cost of gasoline, diesel, and electricity. Companies that have to pay more for these essentials also must compensate by raising their prices for food, services and products. Aiming to limit these costs, the Legislature wisely directed ARB to establish a “price ceiling” on allowances.
The problem is ARB is now proposing a price ceiling that is nearly twice as high as most experts recommend, allowing costs to rise to the point of financially ruining California families and communities.
Consider the cost of gas. According to the ARB’s own economic analysis, every $10 that businesses must spend on carbon allowances adds 9 cents to the cost of a gallon of gasoline. Using this math, the nonpartisan Legislative Analyst calculates that ARB’s proposed price ceiling could add $1.20 to the cost of gas per gallon. Imagine workers who are trying to get by on minimum wage, commuting an hour or more to work each day, now paying $1.20 more per gallon of gas. This is untenable.
Now consider energy bills. Almost one-third of U.S. households struggle to pay their energy bills, according to the U.S. Energy Information Administration, and about one in five had to reduce or forgo food or medicine just to pay their bill. As bad as these numbers are, research shows Californians actually pay 41 percent more than the national average for electricity. ARB is proposing to boost those costs, without safeguards in place to limit them.
Energy costs are only the start. Farmers and ranchers say their increased bills will cause food prices to go up. Manufacturers and truckers say the higher cost of diesel will make products more expensive. Across the board, employers who are paying more just to stay in business will find it harder to pay their workers good wages or even keep them on the payroll.
California already has the highest rate of poverty in the country, according to the U.S. Census Bureau. That’s why it should be the regulators’ job to protect consumers and businesses from unchecked cost increases.
The legislature required ARB to “avoid adverse impacts on resident households, businesses, and the state’s economy,” and ensure the regulations “do not disproportionately impact low-income communities.” But unfortunately it looks like ARB didn’t get the message.
I implore ARB to revisit its proposal and instead develop a plan that is aligned with the Legislature’s direction: Containing costs through a sensible price ceiling. My community cannot afford what’s being proposed right now.
Robert Silva is a member of the Mendota City Council.