Modified Essay

California High Gas Prices

Gas Prices in California have skyrocketed over the past few years, way over the national average as a result of the green fuel. Global warming has pushed some states to act by enforcing laws to conserve the environment. These laws have negatively affected the prices of gas, especially in California. The increased prices of gas over the national average continue to rise with the implementation of more policies. In this article, we will review in depth the causes of this increase and possible solutions.

The Causes of High Gas Price in California

The need to reduce global warming by enacting policies that enforce reduction of carbon dioxide into the environment continue to put a strain on the economy, especially the gas prices. The anti-carbon regulation purported and enforced by the green cartel activists and liberal politicians continue to exert an economic toll on the Californians. Furthermore, they have continued to increase energy costs in a bid to discourage its consumption. One of the means of discouraging carbon usage is by increasing the costs and taxes on the relative products in a bid to push the consumers on another fuel – a greener option (Allysia 2). The electric rates and gas prices in California were more than 23 cents that of the national average of the normal gas in 2006.

Another catalyst of the increased prices is the state’s mandate to have California produce renewable energy up to 33% of the state’s electricity by 2020 (Allysia 2). Even further, Governor Jerry Brown and his Democratic legislators are on the way to enact a law that will raise the mandate to half of the state’s electricity to be renewable energy by the year 2030.

By mandating the use of renewable energy like water, wind and solar, the global warming gas carbon dioxide (GHG) will effectively reduce. However, the installation of renewable energy is very costly. Furthermore, the demand for gas has surpassed any attempts and methods of replacing crude oil. MTBE a fuel additive was banned due to its water contamination. Smaller inefficient refineries in the California area were forced to shut down thereby cutting the amount of gas produced. The result of this move led to increased gas prices. As the demand for a product increases and the product’s availability in the market decreases, the market tries to establish equilibrium by raising the prices. Hence, the prices of gas went higher and higher due to the decreased producers of gas. Following the explosion at Exxon Mobil refinery along with the labor stoppage at Tesoro plant, the prices of gasoline rose with nearly a dollar (Allysia 4). The further increase is expected given the annual maintenance of oil refineries.

The cause of the price increase has been the absence of a substitute product that can and would sustain the current demand. Furthermore, the need to convert to renewable energy is justifiable; however, the means of adopting the energy is unplanned and reckless. There are few products that support green fuel, and even more so, they are very expensive given their nature. Consequently, the people’s wish and need to convert to these means are just unachievable due to their high cost of installation. Also, there continues to be debate as to whether global warming actually exists or not, with scientists providing different numbers on the amount of temperature rise over the last few decades. Given the different results, some people believe that going “green” is a scheme promoted by the cartels of green energy to push for their products and make money.

The Oil Extraction Tax

An oil extraction tax is a great measure because it allows communities to be reimbursed the impact that the development of oil and natural gas has on their infrastructure. When states impose taxes and fees over the extraction, production, and sale of such natural elements, the state will receive money to help offset the gas prices and discourage the harvesting of the crude resources thereby pushing for implementation and adoption of the new green fuel. The extraction tax is a strategy that will benefit everyone without offsetting the demand curve. As the quantity of the gas goes down, instead of the prices shooting up, the money regained from taxing the oil industry will help restore equilibrium by paying for some of it (Allysia 3). In the long run, an alternative to the green fuel will be slowly installed without causing much harm to the customers.

In conclusion, the extraction tax is the opposite of what the Californian state men have done, they have increased the prices of electricity and other subsidiaries in a bid to discourage its use; however, they should tax the oil industry firms and not the consumers. Taxing the oil firms will force them to implement better technology to solve the problem or stop harvesting crude oil when the revenues fall way below the cost of production. The tax act is a brilliant strategy that will incorporate the desired goals without punishing the consumers for a situation that is beyond their control.

Work Cited