Price Increases from Cap and Trade Would Hurt Oregonians

by Partnership for Oregon Communities —

If you want to know how much Oregon’s proposed cap-and-trade bill, House Bill 2020, will cost you, keep a calculator handy. In hearings before the Joint Committee on Carbon Reduction, much of the testimony has detailed the likelihood of significant price increases.

Some of the most concerning examples include:

Gasoline prices: Oregon, which added 10 cents to its per-gallon gasoline tax in 2017 as part of a transportation bill, already has some of the highest motor fuel prices in the nation. The Oregon Department of Environmental Quality (DEQ) estimates that a cap-and-trade system initially would add at least 16 cents per gallon to the cost of gasoline. That increase would make Oregon the third most expensive state in the nation in which to purchase gasoline, Marie Dodds, director of government and public affairs for AAA Oregon/Idaho, told Joint Carbon Committee members on February 11. Only Hawaii and California would have higher prices.

Natural gas prices: Some of the most staggering price increases would be incurred by the 65 percent of Oregonians who are natural gas customers. NW Natural estimates that prices would initially jump 11 percent for residential customers and 28 percent for industrial customers and by 2040 would be 53 percent higher for residential customers and 117 percent higher for industrial customers.

Food prices: Though cap-and-trade would not directly tax food, price increases would be all but certain. Consider the different ways that the proposed bill would raise costs for food producers, processors and distributors. The estimated 15- to 20-cent a gallon increase in diesel prices comes on top of a 53 percent (over eight years) increase in weight-mile taxes on trucks that was part of the 2017 transportation bill. Farmers would be hard hit by increases in both natural gas and motor-fuel prices, putting pressure on them to raise prices where possible. Food processors would face the same increased energy costs. With higher costs at each level of the food chain, a combination of higher prices and lost jobs would be inevitable unless adequate allowances and offsets are added to HB 2020.

All of these price increases involve essential goods, making low-income Oregonians particularly vulnerable. Home energy costs are influenced by so many factors that there’s no accurate way to project how much prices would rise for a “typical” family. But, the U.S. Energy Information Agency estimated that in 2015, 31 percent of U.S. households “faced a challenge” in meeting their energy needs. For financially challenged households, paying utility bills often involves a tradeoff with money spent on food, which typically requires about 15 of the income of families in the bottom 20 percent of household income.

What will Oregonians receive in exchange for these higher prices? Not much. David Roland-Hoist, who led the Berkeley Economic Advising and Research team that developed an assessment of Oregon’s cap-and-trade program, acknowledged HB 2020 will do little, if anything, to reduce global emissions. Instead, he touted the health benefits of reducing local emissions. But being able to afford food, heating fuel and gasoline to get to your job – if you still have one – have an immediate impact on health.

As it turns out, you don’t even need to use your calculator to see that the costs of cap-and-trade as currently designed would put a big dent in budgets throughout Oregon and would be especially harmful to financially vulnerable Oregonians.

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Partnership for Oregon Communities is committed to finding positive solutions to address environmental challenges. We will vigorously challenge solutions we feel limit opportunities for Oregon communities and families to thrive in every corner of our state.