Gas Price Up 26 Cents A Gallon in Massachusetts? Carbon-Emissions Fuel Fee A Lot More Expensive Than Originally Thought, New Study Finds

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The cost of the Transportation and Climate Initiative fuel fee may be 50 percent higher than initial estimates, a new study this week reports.

The initiative is a 12-state pact of New England and Mid-Atlantic states that have expressed openness to charging fees to fuel providers based on their carbon emissions. The funding is supposed to be targeted for public transportation, with the idea of decreasing the number of cars on the road and therefore decreasing emissions.

The new study, commissioned by the Fiscal Alliance Foundation and conducted by William Burke and David G. Tuerck of The Beacon Hill Institute, concluded it would take a fuel tax much higher than 17 cents per gallon to reduce carbon dioxide emissions by 25 percent – which is the number announced by supporters in December 2019.

Instead, the newly released study found that the gasoline tax would have to increase by 26 cents per gallon and the diesel tax by 52 cents per gallon. That would impose an average increased burden on Massachusetts families of $738 a year and eliminate 9,667 private sector jobs in the Bay State, according to the study.

Overall, the study found the fuel increases would reduce global greenhouse gas emissions by 0.0009 percent in 2022 and 0.00083 percent in 2026.

Why the disparity?

According to the Fiscal Alliance Foundation, previous cost estimates have been based on a flawed assumption.

Typical projections for the Transportation and Climate Initiative take into account measures already taken by states to reduce their emissions by 19 percent. Therefore, cost projections in the past showed what it would cost to reduce emissions by six percentage points to get to 25 percent reductions — not a 25 percent emission decrease from the Transportation and Climate Initiative itself, which is what the initiative aims to deliver.

“What the study found here is truly astounding,” Fiscal Alliance Foundation spokesman Paul Craney said in a statement. “The cost associated with TCI is magnitudes larger than previously reported. For the first time, we now know how many private sector jobs would be lost, and the increase in taxes it would cost every Massachusetts family.”

“The most appalling fact that’s been missing by TCI is the price on diesel costs,” Craney added. “Now we know a price and it will come with a high cost, which will negatively impact commerce and the transportation of almost all goods in Massachusetts. This would have a significant impact for consumers with virtually no environmental benefit.”

The Transportation and Climate Initiative fuel fee has the support of Massachusetts Governor Charlie Baker, a Republican, who has stuck by it even as the Republican governors of New Hampshire and Vermont and the Democratic governor of Connecticut have bailed on it because of the initial cost projection in December 2019.

New Boston Post contacted the Massachusetts Department of Transportation, a state agency, seeking comment about the higher cost estimates predicted by the Beacon Hill Institute study.

Jaquelyn Goddard, a spokesman for the state Department of Transportation, provided a written statement expressing support for the Transportation and Climate Initiative but not addressing the new study’s projection of higher-than-initially-reported fuel costs.

“Governor Baker is pursuing the Transportation and Climate Initiative as data shows it would be an effective tool to reduce greenhouse gas emissions from the transportation sector and because it has been met with a broad coalition of support from members of both the business and environmental communities who believe this initiative will further mitigate the impacts of climate change, protect the health of our residents, and build a more resilient, sustainable and equitable transportation system for the next generation,” Goddard said in the written statement.

Opponents of the fuel fee say the new cost estimates mean that what they consider a bad policy proposal is actually worse than it initially seemed.

William Burke, the director of research at The Beacon Hill Institute, said poor people would be hit especially hard.

“TCI is a hidden gasoline tax that is going to directly impact the average Massachusetts household disposable income,” Burke told New Boston Post in an email message. “Gasoline taxes are regressive and lower income households especially will be the ones who are most adversely affected under TCI. When the prices of gasoline and diesel are increased by this magnitude, there will be a considerable shrinkage in economic activity across the state.”

Christopher Carlozzi, the state director for the National Federation of Independent Business-Massachusetts, said the projections show how bad the Transportation and Climate Initiative would be for small business owners.

“The new report shows it would cost an additional 26 cents a gallon, meaning a small business owner filling-up their pickup truck would pay an additional $5.20 to $10.40, depending on the size of the fuel tank — not to mention fueling mowers or heavy equipment,” he told New Boston Post in an email message. “That’s a big hit to a small business owner’s bottom line and every driver’s wallet.

“Many small businesses depend on fuel to conduct business, and they will have to raise the price of the goods and services they provide,” he added. “That will increase consumer costs and make Massachusetts much less competitive with neighboring states and likely damage the state’s economy.”

State Representative Shawn Dooley (R-Norfolk) told New Boston Post he is not surprised by the Fiscal Alliance Foundation’s latest report.

Dooley said the entire Transportation and Climate Initiative process is flawed because it does not go through the state legislature.

”I still believe the more concerning issue is the creation of any taxation by executive order bypassing the legislature,” Dooley said in an email message. “Further, by joining a coalition of other states we acquiesce our authority to non elected people who have no loyalty or duty to the Commonwealth. Issues of this magnitude should be fully vetted, debated, and voted on in full view of the citizenry.”

There does not appear to be much support for the Transportation and Climate Initiative carbon-emissions fuel fee in Massachusetts. A Massachusetts Fiscal Alliance poll in late January found that 61 percent of Bay Staters disapprove of the proposal.

The proposed carbon-emissions fuel fee is not the same as a gas tax increase, although both measures would increase the price of gasoline and diesel at gas stations.

The Massachusetts House of Representatives approved on March 4 a bill that would increase the state’s gasoline tax by 5 cents a gallon (from 24 cents now to 29 cents) and the state’s diesel tax by 9 cents a gallon (from 24 cents now to 33 cents). That bill awaits action by the Massachusetts Senate and, if it gets that far, Governor Baker.