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Cap-and-trade policies may harm California shippers

California’s transportation and logistics industry may be at risk if state government “green” policies are enacted
By Patrick Burnson, Executive Editor
May 03, 2012

California’s transportation and logistics industry may be at risk if state government “green” policies are enacted.

The California Trucking Association (CTA) today released a study that shows significant job losses directly attributable to California Air Resources Board’s (CARB) fuel policies.

Researchers said that the goods movement and agriculture sectors will be especially hard hit if the policies are allowed to go into effect as currently designed.

The report titled “The Impact of the Low Carbon Fuel Standard and Cap-and-Trade Programs on California Retail Diesel Prices” demonstrates the effect that CARB’s regulatory actions will have on the state’s retail diesel future leading to a $6.69 per gallon price tag.

The study, prepared by Stonebridge Associates, Inc., finds that by 2020 CARB’s Low Carbon Fuel Standard (LCFS) in combination with the questionable AB 32 Cap-and-Trade Program could increase the price of diesel fuel by $2.22 per gallon. That would represent more than a 50 percent increase in the price of diesel fuel and a shocking $6.69 per gallon at the retail pump. The average price difference between California and neighboring states would be $2.33 per gallon when accounting for taxes.

According to the study, between the year 2015 and 2020, these higher “California-only” diesel fuel costs will cause a loss of nearly 617,000 jobs in the containerized import sector, $68.5 billion in lost state domestic product, $21.7 billion in lost income and $5.3 billion in lost state and local taxes

California’s transportation and logistics industry is responsible for almost 14 percent of the state’s economy and is an important source of reliable good paying jobs in this state. However the study states that a “California-only” diesel price caused by CARB’s poor program design will put California’s transportation sector at a significant competitive disadvantage.

“CTA is supportive of the production and use of alternative fuels, but the cost gap between CARB’s Low Carbon Fuel Standard and the diesel fuel that the other forty-nine states will continue to use is unacceptable,” said Scott Blevins, President of Mountain Valley Express and 2012 CTA President. “This is a serious setback for any business dependent on diesel fuel for its operations.

This news comes at a time when some economists are forecasting an economic rebound in California.

“The Golden State saw modest employment growth from February to March, adding back 18,200 jobs (seasonally adjusted) in the month-over-month period,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.

“This is the 8th consecutive month the state has seen gains in total nonfarm employment.”

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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