Washington Surpasses California as State with Highest Fuel Prices

For years, California has been known as the state with the highest fuel prices in the United States. However, recent data from the American Automobile Association (AAA) shows that Washington has officially surpassed California in fuel prices. Unleaded gasoline purchases in Washington jumped by 32 cents over the past month to $4.93 a gallon, while the national average is presently $3.58 per gallon.

Washington’s Carbon-Pricing Program

Washington’s fuel pricing is not due to unforeseen supply problems or being isolated in the middle of the ocean. Earlier this year, the state introduced a new carbon-pricing program as part of the Climate Commitment Act and Clean Fuel Standard. The program fines businesses for any greenhouse gas they emit, with the aim of spurring competitive environmentalism and generating revenue for the government. However, it appears that companies are raising their prices to offset the new green fees.

According to The Seattle Times, the first two quarterly auctions of Washington’s emission allowances hauled in more than $850 million. However, energy companies have responded by passing on the compliance fees to consumers. Those costs add up to about 50 cents per gallon for the consumer, according to the Oil Price Information Service. The state Department of Ecology, which oversees the carbon-pricing program, says it’s aware of oil companies passing on the costs but has no power to stop it.

Impact on Consumers

Gas prices are still lower than the inflation-plagued summer months last year, but the spike has bolstered the arguments of conservative think tanks and trade organizations representing fuel companies that are running public-messaging campaigns calling the compliance fees a tax. Some are calling for the repeal of the climate legislation altogether.

Whether or not Big Oil’s response was obvious, it doesn’t change the fact that another so-called climate initiative has resulted in consumers spending more of their money. Washington and Oregon are neighboring states and have enjoyed similar fuel prices throughout most of history. But the former began seeing its energy prices break away roughly a decade ago with a dramatic jump witnessed at the start of 2023.

Oil companies aren’t even trying to keep this a secret. Allowances are tradable, allowing wealthy businesses to effectively buy the right to pollute more than their rivals. But the industry has also announced it would be instituting a fee on fuel sales for costs incurred by trying to comply with Washington’s new regulatory scheme.

Future of Fuel Prices in Washington

This likely means that Washington boasting higher fuel prices than California won’t be an isolated event. The two states will probably be in competition for years to come as they continue to introduce environmental policies that will lead to oil producers raising their prices in an effort to remain ludicrously profitable.

While the Golden State still averages higher prices in its urban hubs, Seattle has settled in at $5.09 for a gallon of regular gasoline. CNN also reported that Washington’s Skamania County presently averages $5.32 a gallon, which is trending higher than just about everywhere else in the country.

“This is going to have a minimal impact, if any. Pennies. We are talking about pennies,” Governor Inslee said in 2022. “Potentially, not all of this would be passed off to the consumer, and what they would [pass on] would be pennies.” However, it appears that the impact on consumers has been much greater than anticipated.

Political Implications

The matter is now being framed as wholly political. Conservatives are being accused of helping the oil industry by favoring deregulation, and Democrats are being accused of championing government intervention that will ultimately encourage the energy sector to raise its prices.

In conclusion, Washington has officially surpassed California as the state with the highest fuel prices due to its new carbon-pricing program. While the program aims to spur competitive environmentalism and generate revenue for the government, it appears that energy companies are raising their prices to offset the new green fees. This has resulted in consumers spending more of their money, and it is likely that Washington and California will continue to compete for the dubious honor of having the highest fuel prices in the United States.