Chamber Study Shows Government Fuel Proposals Would Cost California Consumers $8 Billion a Year
(June 30, 2006) A report released yesterday by the California Chamber of Commerce concluded that proposals to arbitrarily reduce petroleum demand and mandate alternative fuels would cost $8 billion a year, and will have an impact on consumers equivalent to raising gasoline prices to above $5.00 per gallon. “Dr. Keeley’s report shows there’s a right way and wrong way to pursue the diverse sources of transportation fuels needed for the future,” said Allan Zaremberg, president of the California Chamber of Commerce. “Arbitrarily reducing petroleum demand and mandating alternative fuels will wind up doing more harm than good and costing consumers billions in unnecessary costs. A better strategy is to rely on market forces, subject to environmental concerns, to provide reliable and affordable fuels.”  | | Chamber President Allan Zaremberg (right) and Dr. Michael Keeley, senior vice president of Cornerstone Research, offer a blueprint for alternative fuel consumption. | Prepared by Dr. Michael Keeley, senior vice-president of Cornerstone Research, the report compared the California Energy Commission’s recommendation to reduce petroleum demand by 35% by 2025 to Governor Schwarzenegger’s goal of establishing policies that provide for adequate, reliable and affordable energy supplies. The report concluded this policy not only would affect consumers’ driving the equivalent of raising gasoline prices to $5.00 per gallon or more -- equal to $8 billion a year in added costs – but it would also result in more than 90,000 lost jobs. Among the report’s other findings: - Consumers will use alternative fuels only if the total costs are equal to or lower than petroleum-based fuel. Government mandates for alternative fuels would increase fuel prices substantially.
- None of the Energy Commission’s policy options would increase energy supplies, and some might actually increase dependence on imported crude oil and would lead to a reduction in domestic oil production.
- The consumption reduction proposal will have little benefit in reducing greenhouse gases and may be self-defeating if production and employment move to other states and countries.
The Keeley report also recommended an alternate approach to meeting the goal of providing adequate, reliable and affordable transportation fuels. Its major elements: Reliance on market forces, subject to environmental concerns. - Removing regulatory roadblocks to alternative fuel and petroleum-based fuel production.
- Encouraging fuel efficiency by providing consumers information about actions they can take to improve fuel efficiency.
- Encouraging conservation and promoting new technologies by state purchase of vehicles that are fuel-efficient, have low emissions and are alternatively fueled.
- Providing state funding for advanced energy technologies that protect the environment.
In addition to the Chamber, Californians for Reliable and Affordable Energy includes the California Business Roundtable, California Building Industry Association, Western States Petroleum Association, California Retailers Association, California Grocers Association, and the California Hotel and Lodging Association. View full report. View key findings.
View report highlights. Staff Contact: Vince Sollitto
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