World crude oil prices have risen since the U.S. and Israel’s attacks on Iran. Although prices briefly spiked above $115/barrel, they have since fallen. And with the Strait of Hormuz reopening, prices should continue to decline toward their pre-Iran war levels of around $70-$75/bbl.
The rise in crude oil prices has led to about a 70-cent increase in average U.S. gasoline prices, bringing the average to $3.70/gallon. Although that’s painful, it remains far lower than prices in 2022, which spiked to over $5.00/gallon nationwide. Moreover, prices should fall once normal shipping through the Strait of Hormuz resumes.
The New York Times has engaged in much garment-rendering of the impact of gasoline price increases on energy affordability, but it has been notably silent about the far more economically dangerous hit to statewide affordability: the mandates of the state’s 2019 Climate Leadership and Community Protection Act (CLCPA).
The CLCPA required the state to implement a carbon cap-and-trade system, which is misleadingly labeled as “cap-and-invest” by January 1, 2024. That system would have required fossil-fuel sellers – including natural gas companies, heating oil suppliers, and gasoline retailers to purchase emissions “allowances.” Over time, the quantity of allowances is to be reduced until the state reaches “net zero” emissions by 2050.
California, which has the highest gasoline prices in the country (excepting Hawaii), has had such a system in place since 2013. The money collected is bestowed by that state’s legislature on its favorite projects, especially the “bullet-train-to-nowhere,” which has already received $7.9 billion and been promised an additional $1 billion annually through 2045.
Recently, the California Air Resources Board (CARB) proposed to further reduce allowances for 2026 – 2028 below the levels it had previously established. Not for nothing did this proposal result in Chevron, one of that state’s largest refiners, warning of soaring gasoline prices and the loss of over 500,000 jobs.
Fearing political blowback, Governor Hochul has ignored the CLCPA’s cap-and-trade system mandate. But environmentalists have sued to force the state to implement it, and the case is now tied up in court. But unless the state legislature repeals or amends the CLCPA, it is unclear how the state can ignore its own law.
A new reason for the Governor’s political bobbing and weaving a recent estimate of the CLCPA’s estimated cost to New Yorkers that was prepared by the New York Energy Research and Development Authority (NYSERDA). On February 26, Doreen Harris, NYSERDA’s President and an early cheerleader for the CLCPA, issued a memo claiming that, without changes to the law, the price of gasoline could increase by more than $2/gallon by 2031. The memo also stated that the price of natural gas could increase by an additional $17 per million Btus (equivalent to about 1,000 cubic feet, as retail gas customers are billed).
The NYSERDA memo found that the average household’s costs would be an additional $4,000/year Upstate and $2,300/year in New York City. According to the U.S. Census Bureau, there are about 4.3 million households Upstate and around 3.5 million households in New York City. So, the estimated impacts by 2031 translate into over $17 billion Upstate and another $8 billion in New York City.
Those cost increases apply to a single year, but the costs will be borne by households each year. Moreover, the memo also stated that “similarly burdensome costs should be anticipated for small and medium commercial businesses.” Although the memo didn’t provide a specific dollar value, the U.S. Energy Information Administration reports that commercial customers use slightly less energy than residential customers. Hence, the impact on these customers would likely be around $20 billion annually. Industrial customers would be similarly affected. Thus, by 2031, New York consumers and businesses would likely spend $50 billion more per year on energy, inflicting catastrophic damage on the state’s already moribund economy.
Worse, the hoped-for carbon reductions from the CLCPA will have no measurable impact on the world’s climate. Total emissions were just over 150 million tons in 2023. That’s less than one-half of one percent of world emissions, which have been increasing by over 200 million tons every year for the last decade. Beleaguered residents and businesses will be forced to pay billions of dollars for absolutely no benefits.
Yet state lawmakers seem oblivious to the economic train wreck heading their way. On March 5, 29 senators signed a memo rebuking NYSERDA’s findings and claiming that it is “the fossil fuel status quo that has created the affordability crisis.”
These senators are, to put it mildly, nuts. Implementing the CLCPA will lead to economic ruination, and refusing to recognize the critical importance of affordable fossil fuels takes head-burying in the sand to new depths.
It’s unclear what, if anything, would get these politicians to face reality. Perhaps nothing.
But with the election of a new governor two years away, New Yorkers have been warned.
