Todd Myers says the only way our climate policies are going to be effective is by being honest about the facts and following where they lead
Washington Policy Center
Bad facts make bad policy.
Defending bad policy requires increasingly contorted and unsubstantiated claims. Washington’s new climate tax, known as the Climate Commitment Act (CCA) is a good example of what happens when the effects of bad policy oblige its supporters to contort reality to defend their agenda.
Among those making arguments that are contradicted by the data is State Representative Alex Ramel. In a recent editorial Rep. Ramel claimed that “Big Oil, not cap and trade” is the reason Washington’s gas prices are increasing. In the piece, Ramel makes several errors, but a few stand out.
First, he criticizes oil companies for passing along the cost of the tax on CO2 emissions to consumers at the gas pump. This complaint is strange because the purpose of the tax, as Rep. Ramel certainly knows, is to increase the price of gasoline and encourage people to switch to electric vehicles. He is complaining the law he supported is working as intended.
He claims, “The Seattle metro area is the second-most profitable market for fuel suppliers in the U.S., with an average profit margin of $1.09 per gallon in December 2022.”
This is false.
As we noted recently, the source for this widely misquoted statistic is a group called OPIS, a Dow Jones company that tracks industry costs.
The $1.09 amount he cites doesn’t relate to oil companies.
It is the markup gas stations (most of which are independent like Costco, Safeway, and others) add to the wholesale cost. Additionally, it isn’t profit, but is the amount that gas stations have to add to cover their costs. Whatever is left over after gas stations pay their expenses is profit but is far less than the $1.09 inaccurately cited by Rep. Ramel.
He did not, however, check his facts.
His claim that oil companies make $1.09 in profit per gallon is wrong because it isn’t about oil companies, and it isn’t profit.
The cherry on top is the claim that oil companies added a surcharge “a month and a half before the cap and trade auction.”
What he leaves out is that the tax took effect January 1 of this year but the specific amount was unknown because the Washington State Department of Ecology, who oversees the program, failed to hold the first auction to set prices before the law took effect. What he highlights is bureaucratic failure by the state. This is like demanding grocery stores charge sales taxes but refusing to tell them how much.
It is understandable that politicians don’t want to face the political consequences of raising taxes, but the claims made by Rep. Ramel are factually incorrect.
Second, he cites potential damage from climate change and claims the tax on CO2 emissions would prevent these costs.
Ramel wrote, “What’s truly at stake is hundreds of billions of dollars in damage from natural disasters, reduced crop yields, rampant wildfires, an overstressed health care system due to heat fatigue and illness, and much more. … Acting now to switch to clean, efficient energy can help prevent these long-term costs.”
The state’s own analysis says this is not accurate, or at the very least there is no evidence that it will reduce (certainly not “prevent”) these costs.
At the beginning of the discussion on estimating the benefits of the CCA, the analysis says plainly, “it is not possible to specify the local benefits to climate change resulting from control of local emissions.” This message is repeated as the analysis looks at individual potential climate-related impacts.
For example, under the heading of “Wildfire risk and costs,” the final cost-benefit analysis (CBA) says, “we do not know the extent to which these environmental and human costs would be avoided.” The same is true for “Heat-related deaths,” where it says, “we do not know the extent to which reductions in GHG emissions would reduce the frequency or severity of heat waves.” And again under “Environmental Justice,” the analysis says, “we do not know the extent to which reduced climate change impacts would specifically benefit these communities.”
Even where the authors of the CBA attempt to put a price on benefits, they admit they can’t quantify benefits. For example, it includes estimates for reducing air pollution that may occur as a side effect of the climate tax, but ultimately admits, “we cannot confidently estimate the degree to which emissions of these pollutants will be reduced under the adopted rule…”
The inability to determine benefits to Washington state is one reason the Department of Ecology specifically refused to calculate state-specific environmental benefits from the climate tax. Instead, the authors used a global estimate of benefit, counting potential benefits in Germany, Thailand, and elsewhere in the world in their total.
Nowhere in the state’s own analysis of benefits from the climate tax does it indicate the policy will prevent the potential harm Rep. Ramel cites as a justification for supporting the policy.
Climate policy is complex and there are many ways people can disagree about subjective elements of climate policy, including risk tolerance or how to balance various societal priorities. I have said for more than a decade that we should take steps to reduce the risk of climate change and I advocated policies to reduce CO2 emissions more than a decade before Rep. Ramel was in the legislature.
The claims he made in his piece, however, are not about judgment, but are factual errors or unsubstantiated claims. The only way our climate policies are going to be effective is by being honest about the facts and following where they lead, independent of political expediency. The flurry of false claims about the impact of the tax on CO2 emissions shows that some are not ready to be honest about climate policy.
Todd Myers is the director of the Center for the Environment at the Washington Policy Center.
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