Cheap oil hides global-warming fee, for now

By Dan McSwain,

A new state fee on gasoline designed to combat global warming arrived at the corner gas station on New Year’s Day, but tumbling oil prices are likely to insulate consumers for the time being.

It’s a lucky break for lawmakers who, concerned about political backlash, made a failed attempt to delay the fee.

The amount of California’s new fee is determined by a complex market for emissions rather than set by legislation. The market has been stable amid heavy regulation, yet critics say it could experience bouts of volatility that would send gasoline costs soaring.

Last year, as retail prices hit $4.30 a gallon, oil-industry trade groups warned the fee was a “hidden tax” that could add 70 cents a gallon or more.

However, this week the fee added just 10 cents a gallon to wholesale costs, based on November auction prices in the state’s “cap-and-trade” market that sets the fee.

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