FAQs: How regressive Democratic policies increased Washington’s gas prices

For weeks during the summer of 2023, Washington had the distinction of having the highest gas prices in the nation – competing for the unfortunate honor with California. Prices hovered around $5 a gallon in Washington. And it affected everyone, especially those who can least afford it – the working middle class, people on a fixed income, those who travel long distances for work, and farmers struggling with the cost of producing affordable food. On Aug. 10, 2023, The News Tribune reported more than a third of Washington drivers canceled summer travel plans over high gas prices.

Gov. Inslee is blaming oil companies. He held a news conference on July 20, 2023, along with Democratic lawmakers, to say it’s “the greed and avarice of these oil companies who are still not telling us the truth.” The governor even blamed maintenance of an oil pipeline for the higher prices. Conveniently, however, he left out the real reason Washington is competing for the highest gas prices in the nation.

Here are some FAQs (frequently asked questions) and facts to help you understand Washington’s gas prices:

Rep. Mary Dye, ranking Republican on the House Environment and Energy Committee, said it best in this statement following Gov. Inslee’s news conference:

Washington state has the highest gas prices in the nation because of the governor’s cap-and-trade program that took effect in January. Governor Inslee’s new climate mandate, which is the most expensive of its kind in the nation, has forced fuel prices to rise by 50 cents per gallon in our state. This means about $500 more to the average Washington family per year. This program is costing consumers three times more than the Legislature was told. Washington’s inflated fuel prices are not because of ‘Big Oil,’ but because of big government gouging Washingtonians.

—Rep. Mary Dye, R-Pomeroy

Independent media sources, such as Capital Press, also confirmed this statement. In an editorial entitled, “Inslee distances himself from impacts of his climate policies,” the Capital Press says Inslee’s blame of oil companies for Washington’s highest gas prices in the nation is “a bunch of codswallop meant to draw attention away from the impact of the state’s carbon-emission allowance auctions are having on the price of gas and fuel.”

The editorial further notes, “Washington’s rise to the top in gas prices coincided with the Jan. 1 implementation of cap-and-trade legislation, which imposes a fee on carbon emissions from fossil fuels.”

In 2008, Washington enacted legislation that set a target to reduce greenhouse gas emissions within the state to 25 percent below 1990 levels by 2035, and 75 below 1990 levels by 2050. The Department of Ecology (DOE) was put in charge of monitoring and tracking the state’s performance in reducing emissions. Their reports consistently showed that Washington was not on track to reach those emission reduction goals. For example, emissions data compiled by DOE shows that Washington’s greenhouse gas emissions actually increased in 2017, 2018, and 2019.

In 2020, Gov. Inslee signed into law House Bill 2311, which increased the aggressiveness of Washington’s emission reduction targets to require a 45 percent reduction in greenhouse gas emissions by 2030, and 95 percent reduction of emissions relative to 1990 levels by 2050.

In the 2021 legislative session, majority Democrats in the state House and Senate passed two major, controversial pieces of legislation. House Bill 1091, the low-carbon fuel standard mandate, directed DOE to adopt a rule by Jan. 1, 2023, that establishes a Clean Fuels Program to reduce the carbon intensity of transportation fuels through regulation of fuel producers. House Republicans opposed this policy. In 2020, we predicted it could significantly raise the cost of gasoline and diesel.

Also in 2021, majority Democrats passed Senate Bill 5126 – the governor’s keystone climate “cap-and-trade” legislation, also known as the Climate Commitment Act (CCA).

Under this program, Washington companies that emit carbon dioxide, including oil companies, must buy allowances at state auctions. In July 2022, Gov. Inslee told FOX 13 Seattle the program would have a minimal impact on gasoline prices. “Pennies. We are talking about pennies,” said the governor.

We now know that is not true. According to Affordable Fuel Washington, the cost to comply with this program is estimated to be $1.5 billion in the first year alone. 

Washington’s cap-and-trade auction on May 31, 2023 set the carbon fee at $56.01 a ton, compared to $30.33 in California. This is three times more expensive than originally predicted when the program was passed by the Legislature and signed into law by Gov. Inslee.

The Western States Petroleum Association estimates the cost of those allowances, which are passed on to the consumer, are as much as 50 cents a gallon.

In a column, Danny Westneat of The Seattle Times wrote: “The truth is 50 cents a gallon is probably the beginning,” adding, “In one sense, this is a ‘duh’ moment. Of course, carbon fees increase the price of gas. That’s the point!”

Under the CCA, Washington state government is expected to rake in billions of dollars from these auctions. Big government is getting even bigger. Regressive policies advocated by Gov. Inslee and passed by majority Democrats are gouging Washington consumers at the gas pumps, costing the average Washington family about $500 per year.

According to the Washington State Standard, during the governor’s news conference on July 20, 2023,  “Inslee seven times blamed gas price increases on the pipeline closure, insisting costs would fall when it resumed operation.” However, it also reports that BP’s Olympic Pipeline, which runs along a 299-mile corridor from Blaine to Portland, isn’t shut down and hasn’t been since late June. BP officials said they shut down the pipeline for a total of three-and-a-half days for routine maintenance, and it was fully operational by June 27, 2023. This brief shutdown had no impact on fuel prices, despite the governor’s allegations.

As of Aug. 10, 2023, it cost $4.056 for regular gasoline in Idaho, according to AAA. In Washington, regular gasoline cost $5.017. That’s a price difference of nearly a dollar a gallon. Even Oregon was paying nearly 34 cents a gallon LESS than Washington.

As can be seen in the chart below, Washington’s and Oregon’s gas prices have historically been similar (red and blue line overlap), but the prices diverged in January 2023 when the cap-and-trade and low carbon fuel programs enacted in 2021 took effect.

If oil companies are the primary reason for higher gas prices, they would charge more for every state – not just Washington. But oil companies are not why Washington consumers are being gouged. Instead, the CCA is responsible for at least 50 cents a gallon in the price of fuel in Washington.

Washingtonians also pay 49.4 cents per gallon for state gas taxes. We have the eighth highest state gasoline taxes in the nation. Combine the CCA cost and the state gas tax, it equals to nearly a dollar a gallon. Washington state government is collecting that money. That’s why Idaho is cheaper.

When the cap-and-trade legislation passed in 2021, Democrats assured the agriculture community that fuels used in the production and transport of agriculture products would be exempt. Unfortunately, the Department of Ecology, tasked to make the exemption, failed to do so. The exemption was also supposed to apply to aviation and marine fuels. Yet no exemption was applied when the CCA took effect in January 2023.

The farming community cannot pass their carbon fees to customers, so farmers were hit especially hard with these additional costs. Republicans introduced House Bill 1780 during the 2023 legislative session to reimburse members of the agriculture industry for those additional costs. However, Democratic leaders refused to give the bill a hearing.

Also during debate of the 2023-25 operating budget legislation, Senate Bill 5187, on the House floor, the majority party rejected Floor Amendment 525 by Rep. Joe Schmick, R-Colfax, to implement the farm fuel exemption and provide $50 million in rebates to farmers. You can watch his House floor speech here.

More than $200 million of the CCA money was appropriated in the 2023-25 operating budget for such things as clean energy siting and permitting, local government planning, energy assistance, and funding for community and tribal participation support. For details, see page 30 of the Operating Budget Summary.

The 2023-25 capital budget included spending of more than $472 million across state government for various projects, including solar, hydrogen, geothermal heating, and other energy projects. See pages 19-21 for CCA-funded projects in the Capital Budget Summary.

The 2023-25 transportation budget included $970 million in CCA revenues.

The CCA is not covered by the state’s 18th Amendment to the Constitution like the state’s gas tax is. That amendment restricts the expenditure of gas tax and vehicle license fees deposited into the motor vehicle fund to “highway purposes.” However, CCA money used by the transportation budget can go for other purposes – like transit and bike paths. That means Washington motorists are not getting replacement roads and bridges with this money. In fact, there will be little noticeable benefit on our roads and highways from all this spending for the public.

House and Senate Republicans share the concerns of citizens across the state impacted by unaffordable gas prices.

In a letter to the Department of Ecology on July 12, 2023, Republican Sen. Chris Gildon outlined several ideas to bring down the cost of cap-and-trade allowances to ease fuel prices. The letter was signed by Sen. Gildon and 42 Republican legislators. Read more here.

Rep. April Connors introduced the Carbon Auction Rebate (CAR) program in the 2024 legislative session. House Bill 2040 would have taken the excess earnings of the carbon tax and sent the money directly to registered vehicle owners in the form of a $214 check ($428 for a typical two-vehicle household). House Democrats refused to give the legislation a public hearing.