Global Warming Bill Reduces Gas Bills

The oil companies and their allies have been claiming that gasoline prices will go up under the global warming bill currently being debated in Congress, Climate Security Act of 2008 (CSA). However, not surprisingly they fail to point out that it is the total transportation fuel bills, not the price per gallon of gasoline, which matters most to household budgets.  

Today’s gas prices are high because oil companies, auto companies and politicians have not stepped up to provide Americans with real, sensible transportation choices to cut our demand for oil.  The solutions are clear: more fuel efficient cars; clean, alternative fuels; and smarter growth to reduce the amount we drive. Wasting less oil means lower fuel bills and exerts downward pressure on global oil prices. 

Because we can’t solve global warming without wasting less oil, the Climate Security Act is also an energy security bill. The Climate Security Act will cut oil imports, promote fuel efficient cars, and require oil companies to start selling cleaner fuels, like electricity for plug-in hybrids.

Our analysis clearly shows that with the Climate Security Act we can cut global warming pollution and have lower fuel bills compared to today’s costs. We estimate that annual household transportation fuel bills in 2020 and 2030 are likely to be $530 to $590 lower than 2007 levels even though Climate Security Act will require oil companies to hold carbon emission allowances for the fuel they produce. Higher fuel efficiency and greater use of electricity to power cars reduce the demand for gasoline and outweigh the increase in gasoline prices due to carbon emission allowances. As shown in Table ES1, household fuel bills are 16 percent less in 2020 and 18 percent less in 2030, resulting in an annual savings of $530 to $590. Our analysis uses the US Department of Energy’s estimate for fuel costs under the Climate Security Act.

Table ES1. Household Fuel Expenditures in 2020 and 2030 with the Climate Security Act

Transportation fuel expenditures, 2006 $/household per year$ 3,220$ 2,690$ 2,630
Change in expenditures from 2007n/a-16%-18%
Savings,  2006 $/householdn/a$530$590


Even if base gasoline prices do not decline from 2007 levels, household fuel bills are still estimated to be lower. To demonstrate this, we develop an alternative scenario where the base gasoline prices do not decline from 2007 level and retail fuel prices rise when carbon allowance costs are included. As shown in Table ES2, we estimate households still save $230 to $390 in 2020 and 2030, despite the increase in retail fuel prices.

Table ES2. Household Fuel Expenditures in 2020 and 2030 with the Climate Security Act Assuming Constant 2007 Gasoline Prices ($2.77 per gallon)

Transportation fuel expenditures, 2006 $/household per year$ 3,220$ 2,990$ 2,830
Change in expenditures from 2007n/a-7%-12%
Savings, 2006 $/householdn/a$230$390


As demonstrated by our analysis, we can solve global warming, reduce our dependency on oil, and have lower gas bills with the Climate Security Act. For too long oil companies have been part of the problem; the Climate Security Act will force them to be part of the solution.