Do Washington State Residents Know Why Their Gasoline Prices Are So High Now?


by Roger Caiazza at

Recent reports note that gasoline prices in the State of Washington are now higher than California.  This is also the first year of Washington’s cap-and-invest program  a “comprehensive, market-based program to reduce carbon pollution and achieve the greenhouse gas limits” set in the Climate Commitment Act.  This post asks whether residents have connected that program to the cost increase.

Washington Climate Commitment Act

Although a bit late to the party for addressing the threat of climate change, Washington’s Climate Commitment Act appears to be even more aspirational than California and New York.  The Washington Department of Ecology (“Ecology”) web page explains:

The Climate Commitment Act (CCA) caps and reduces greenhouse gas (GHG) emissions from Washington’s largest emitting sources and industries, allowing businesses to find the most efficient path to lower carbon emissions. This powerful program works alongside other critical climate policies to help Washington achieve its commitment to reducing GHG emissions by 95% by 2050.

The state plans in Washington, California, and New York all aim for net-zero emissions where greenhouse gas (GHG) emissions are equal to the amount of GHG that are removed.  Washington’s emission reduction target is 95% by 2050.  California is shooting for 85% by 2045 while New York’s target is 85% by 2050.  In addition to the target levels and dates there are differences in what GHG emissions are included, how the mass quantities are calculated, and which sectors of the economy must comply.  Nonetheless, I am sure a case can be made that Washington is the most aspirational.

A key component of the strategy of all three states is an emissions market program variation called cap-and-invest.  According to the New York State Energy Research & Development Authority (NYSERDA) the permits to emit a ton of pollution (the allowance) are distributed freely in a cap and trade program but in a cap-and-invest program the allowances are sold at auction and the proceeds are invested to enable the reductions required.  A more cynical description of the difference would say that cap and trade programs are market-based systems that encourage the free market to find the least cost approach to meet the limits while cap-and-invest programs are disguised carbon taxes.

Cap-and-invest Analytics

My primary interest at the moment is the New York State cap-and-invest program initiative.  As part of the stakeholder outreach process, on June 20, 2023 a webinar (presentation slide deck and session recording) on the program’s analysis inputs and methods that will “assess potential market outcomes and impact from the proposed New York Cap-and-Invest (NYCI) program”.  What caught my attention was a comment that the McKinsey Vivid Economics team would model the cap-and-invest auction and that they had done similar analytic projects for the State of Washington (Video at 13:42).

According to a Ecology web site the Vivid Economics report  shows “new climate change initiatives deliver significant benefits at minimal costs.”  I have never been impressed with most economic analyses of emissions trading program.  John von Neumann famously said “With four parameters I can fit an elephant, and with five I can make him wiggle his trunk.”  Many readers of this blog are skeptical about the value of global climate models because so many parameters are needed to simulate different physical processes in the atmosphere but at least there are physical relationships involved.  Analytical models of cap-and-invest programs parameterize just about everything including human behavior.  I have no confidence in their results.  During the webinar I asked whether the Vivid Economics model had been verified.  Not surprisingly there was no answer.

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