The Truth About The Gas Tax Nobody Voted For

California is now offering rebates of up to $120,000 on electric trucks, with more than $1 billion up for grabs through 2030. The program’s website preemptively assures critics that these massive green subsidies are “not funded by customer or ratepayer dollars.” That’s a bit of a stretch. California’s low-carbon fuel standard funds the program, meaning drivers pay for it at the pump every time they buy a gallon of gasoline or diesel.

It begins with a “carbon intensity” score. Regulators rate every fuel on its lifecycle greenhouse-gas emissions — drilling, refining, shipping, burning — and set an annual benchmark that gasoline and diesel cannot meet. Every gallon a refiner sells therefore generates a “deficit.” To cover it, the refiner must buy credits from producers of biomethane (cow manure), renewable diesel or, increasingly, electricity. Utilities collect the electricity credits and, by regulation, must spend the proceeds on rebates, chargers and “transportation electrification.” The gasoline and diesel refiner, in turn, passes its credit costs on to drivers. Economists call this a regulatory cross-subsidy. In plain English, it is just a gas tax that subsidizes electric vehicles.

And it is not a small one. Weeks after Congress revoked California’s permission to ban gasoline cars last year, a tightened standard took effect requiring a 30% carbon-intensity cut by 2030 and 90% by 2045 — an electric-vehicle mandate through the back door. California’s own economists estimated the new rules would add 47 cents per gallon of gasoline in 2025 and $1.15 per gallon after 2030, a figure the board disowned once it became public. Independent analysts put it at nearly $1.50 by 2035. To date, the program has extracted about $22 billion from gasoline and diesel sales, a total that will keep climbing as the intensity cuts ramp up.

For Californians, this is business as usual. The trouble is that it no longer stops at the state line. Oregon and Washington copied California’s program, New Mexico’s version took effect in April, Hawaii’s governor signed the fifth such program into law in July, and seven more states are considering one. That would be bad enough if only drivers in those states paid. But a lifecycle standard regulates the Texas refinery and the Iowa ethanol plant that ship fuel in, not just the pump at home. Oregon, for example, produces no gasoline at all. As a result, the compliance with its program, as a Ninth Circuit judge observed, is built so that “out-of-state entities bear the full brunt of the law’s burden.”

What do drivers get for the money? Not less pollution. These programs reward and punish carbon intensity, not actual pollutants like smog or soot. And the so-called climate impact is vanishingly small. Oregon boasts its Clean Fuels Program reduced greenhouse-gas emissions by roughly 3 million metric tons in 2024, compared with nearly 58 billion metric tons of greenhouse gases the United Nations says the world emitted that same year, amounting to about 0.005 percent of global emissions. Put differently, Oregon could eliminate those 3 million tons every year for a century, and the cumulative reduction would equal only about two days of current global emissions. In February, the Environmental Protection Agency (EPA) used its own climate modeling and estimated that eliminating every greenhouse-gas emission from every vehicle in America, not just nudging a few states toward electric vehicles, would change projected global temperature in 2100 by just 0.037 degrees Celsius. Yet drivers are being asked to pay billions into a patchwork of state fuel mandates chasing a rounding error on a rounding error.

Congress anticipated exactly this sort of state mismanagement and provided a remedy. Under section 211(c)(4) of the Clean Air Act, once the EPA finds that controlling a fuel characteristic is not “necessary” and publishes that finding in the Federal Register, state controls on that characteristic fall. California alone has a carve-out. Every other state must show its rule is needed to meet a federal air-quality standard.

The Ninth Circuit has already held that a low-carbon fuel standard falls within the provision, and the states have written the rest of EPA’s finding for it. Oregon’s rule says the program “will reduce Oregon’s contribution to the global levels of greenhouse gas emissions.” There is no federal air-quality standard for carbon dioxide or any other greenhouse gas, and a fuel rule aimed at the planet’s atmosphere is not “necessary” to clean up Oregon’s.

In April, the American Energy Association petitioned EPA Administrator Lee Zeldin to make that finding. Drivers in Oregon, Washington, and New Mexico never voted for a gas tax to pay for other people’s electric trucks. Mr. Zeldin should end it and lower pump prices before more states sign on.

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Stephen Moore is co-founder of the Committee to Unleash Prosperity and a former senior economic adviser to President Trump.

Jason Isaac is president of the American Energy Association and founder and CEO of the American Energy Institute. He served four terms in the Texas House of Representatives.

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