Senate Energy Bill Would Have "Modest Impact" on Consumers, Says EPA

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(Washington, DC - Todd Zwillich, Transportation Nation)  Gasoline prices are likely to rise under the energy and climate change bill the Senate is planning to tee up in July, according to an Environmental Protection Agency Analysis released today.

EPA predicts gas prices will hover around $5 per gallon in 2050 under the American Power Act (APA), the main legislative vehicle getting set for Senate debate. That’s about 20% higher than the $4-per-gallon estimate predicted if Congress does nothing.

The agency says gas prices would rise slightly under the APA starting in 2015, with about a 25-cent per-gallon premium on fuel by 2030. Prices will continue to accelerate under the act until reaching the roughly dollar-per-gallon increase by 2050, according EPA’s analysis.

Touting the EPA analysis Tuesday, Sen. John Kerry (D-Mass.) told reporters the bill would have a “negligible” effect on transportation costs for consumers. Instead, it appears a significant rise in gas prices would be largely negated by cuts in other household costs.

EPA points out that household energy costs would actually drop through 2020, stay flat until 2030 then rise an average of 16% by 2050. The rise in gas prices is largely offset by lower home heating and cooling costs for consumers, at least in the short term, the agency's analysis says.

Overall, the bill would have “a relatively modest impact on U.S. consumers,” EPA said in its analysis. “Cap and trade” as envisioned by Sen. Kerry and co-sponsor Sen. Joe Lieberman (I-Ct.) would raise total household energy prices $79 to $146 per year, the agency says.

The price mathematics all depends on the bill’s “cap and trade” policy, which caps carbon production by utilities and other polluters then places an auction price on carbon emission permits. The bill envisions sending money from the auctions back to utilities and consumers themselves to make up for higher energy costs.

EPA says their modeling doesn’t take into account new efficiency standards for light-duty, heavy-duty, and non-road combustion engines. Those standards will likely cut demand for gas, they say. That would likely help press gas prices downward.

Cap and trade faces an uncertain future in the Senate. Democrats are set to meet Thursday to decide whether to include it in an energy bill expected on the Senate floor in July. Kerry acknowledged today that he does not have the 60 votes needed to pass an energy bill with a cap and trade policy included. That could mean cap and trade will fall by the wayside before an energy bill can pass Congress.

Read EPA’s analysis of the American Power Act here.