Study of Low-Carbon Fuel Standard Projects Massive Price Increases

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By Sean McNally, Senior Reporter

This story appears in the June 28 print edition of Transport Topics. Click here to subscribe today.

A new study has found that nationwide adoption of a low-carbon fuel standard would increase the retail cost of motor fuel by as much as 170% over a 10-year period.

“Any way you slice the data, the future projected by this study is a frightening one — higher fuel prices, fewer jobs and lower consumer purchasing power,” said Michael Whatley, vice president of Consumer Energy Alliance, a coalition of fuel users and producers that sponsored the study.

California is preparing a low-carbon fuel standard, over the objections of American Trucking Associations and other groups that have filed suit against the state to block its carbon emissions rules (2-8, p. 31).

CEA’s study assumes that in the first five years after a standard took effect, the price of gasoline would rise to roughly $5 a gallon. Five years later it would be about $7.50. No specific diesel projections were included in the study.

The increase, the study said, is the result of more expensive alternative fuels, such as biofuels, and a reduction in the amount of petroleum that can be used to produce fuels.

The report found that “by 2025, the higher cost of transportation fuel will cause drivers to reduce their driving by 9% to 14% relative to the baseline [and] trucking ton-miles will be down by 9% to 13%.”

“Low-carbon fuels are like cream in a cup of coffee,” the study said. “If enough cream is not on the table to achieve the desired mix, then the only alternative is to reduce the amount of coffee in the cup.

“To reduce transportation fuel consumption sufficiently for the LCFS to be met requires very large increases in fuel prices, so that consumers will limit their driving and demand new vehicles that are must more costly and provide much higher fuel economy,” the study added.

A similar standard to California’s also has been debated as part of federal climate legislation currently being drafted in Congress.

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