BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1468|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 1468
Author: Kehoe (D), et al
Amended: 8/17/03 in Senate
Vote: 21
SENATE ENV. QUALITY COMMITTEE : Not relevant
SENATE ENERGY, U.&C. COMMITTEE : 5-2, 6/22/04
AYES: Bowen, Morrow, Alarcon, Dunn, Murray
NOES: Battin, McClintock
NO VOTE RECORDED: Sher, Vasconcellos
SENATE APPROPRIATIONS COMMITTEE : 7-5, 8/12/04
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Murray,
Speier
NOES: Battin, Aanestad, Ashburn, Johnson, Poochigian
NO VOTE RECORDED: Machado
ASSEMBLY FLOOR: Not relevant
SUBJECT : California on the Move-Petroleum Demand
Reduction Act
SOURCE : Clean Power Campaign
DIGEST : This bill establishes the California on the
Move-Petroleum Demand Reduction (PDR) Act, as specified.
ANALYSIS : Current law, AB 2076 (Chapter 936, Statutes of
2000), requires the California Energy Commission (CEC) and
the State Air Resources Board (ARB) to develop
CONTINUED
AB 1468
Page
2
recommendations to reduce the state's petroleum dependence.
In their 2003 report to the Legislature, the CEC and ARB
recommended a policy to reduce gasoline and diesel fuel
demand to 15 percent below 2003 demand levels, by 2020,
through a variety of transportation energy efficiency
measures, and expanded use of non-petroleum fuels and
advanced transportation technologies, such as alternative
fueled vehicles and hybrid electric vehicles.
This bill:
1.States legislative intent that on-road petroleum demand
be reduced by 15 percent below 2003 levels, by the year
2020.
2.States that the Legislature intends to fully maintain
transportation funding, even if gas tax revenues are
reduced as a result of this bill.
3.Requires the CEC and ARB to, by January 1, 2010, in the
course of their authorized activities, implement measures
to reduce on-road petroleum demand to 2004 levels.
4.Requires the CEC to submit a progress report by January
1, 2008.
5.Provides that if the State Department of Finance (DOF),
in consultation with the Board of Equalization (BOE),
determines that there is a decline in gas tax revenues as
a direct result of this bill, DOF, in consultation with
the CEC, the State Department of Transportation (DOT),
and ARB, shall develop alternative revenue
recommendations to compensate for such declines, and
submit those recommendations to the Legislature. The
Senate Appropriations Committee notes that there is no
requirement that the recommendations be implemented.
6.Specifies that the measures adopted pursuant to this bill
shall not require the imposition of any new or additional
taxes or fees on motor vehicles, petroleum fuel, or
vehicle miles traveled.
Background
AB 1468
Page
3
Concern over high gasoline and diesel prices has recurred
for many years. California experienced gasoline and diesel
price spikes in 1996 ($1.50/gal), 1999 ($1.60/gal), 2000
($1.80/gal) and, once again in 2004 ($2.20/gal). Each
price spike results in investigations and new ideas, though
no California investigation has found criminal activity.
The gas price spikes in 2000 led to several new ideas and
analyses. Ultimately, the new ideas (building a pipeline
to Texas and creating a state-run gasoline reserve) were
found to be unworkable. One analysis was a joint agency
report by the CEC and the ARB on reducing California's
petroleum fuel dependence ("Reducing California's Petroleum
Dependence," August 2003, P600-03-005F).
The report concluded California's demand for gasoline and
diesel fuel will grow far more quickly than will the supply
from California's refineries. From near self-sufficiency
in 2000, the report forecasts that 25 percent of
California's on-road fuel will come from out-of-state
sources by 2010. Based on an analysis of options that are
currently feasible and economical, the report's first
recommendation is that California adopt a policy to reduce
gasoline and diesel fuel demand to 15 percent below 2003
demand levels by 2020, and to maintain that level
thereafter. A number of options are suggested for meeting
the goal, including using more fuel efficient replacement
tires, improving private vehicle maintenance, doubling the
fuel efficiency of light duty vehicles, using natural
gas-derived fuels as blending agents in diesel fuel, and
implementing fuel cell-powered vehicles. The second
recommendations is that the Governor and Legislature should
work with the California Congressional delegation and other
states to double the national fuel economy. Lastly, the
report recommends establishing a goal of increasing the use
of non-petroleum fuels to 20 percent of on-road fuel
consumption by 2020 and 30 percent by 2030.
According to an American Automobile Association report,
California had the highest price for self-serve regular
gasoline in the 50 states in May 2004. The six states with
the highest gasoline prices are, in descending order,
California, Nevada, Oregon, Hawaii, Washington and Arizona
- all western states.
AB 1468
Page
4
The effect of high gasoline prices on automobile sales
isn't clear. The 55 miles-per-gallon Toyota Prius hybrid
is the hottest selling care in the United States, based on
how quickly the car sells. Large Internet-based automobile
purchasing sites observe interest in sport-utility vehicles
(SUVs) is down, while interest in smaller, more
fuel-efficient cars is up. However, General Motors
indicates May will be the biggest month ever for SUV sales
and Toyota notes gasoline prices have had no effect on SUV
sales.
Though it's small consolation, while California gasoline
prices are high, they pale in comparison to other
countries. British gasoline prices approach $7 per gallon,
wile gas prices in Japan are near $4 per gallon.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee analysis:
Combined increased costs to the CED, ARB, DOF, DOT, and BOE
are probably under $150,000 annually. In addition, there
could be potentially significant cost pressures to the
extent that consumer education programs or incentives are
necessary in order to ahieve the demand reduction goals.
Although the current "Flex Your Power" public education
campaign does not address petroleum demand reduction,
Governor Schwarzenegger recently issued Executive Order
S-7-04 which, among other things, (1) directs certain state
agencies to work with various entities "to plan and build a
network of hydrogen fueling stations along roadways so that
by 2010 Californians will have access to hydrogen fuel",
(2) commits the state to, by 2010, increasing the number of
clean, hydrogen-powered vehicles in the state fleet, "when
possible", and in the normal course of fleet replacement,
and (3) specifies that appropriate incentives shall be
provided to encourage the purchase of hydrogen-powered
vehicles.
In 2002-03, gas tax revenues were $2.8 billion. These
revenues are the primary funding source for transportation
projects statewide. A 15 percent reduction in the 2003
AB 1468
Page
5
levels will result in a revenue loss of at least $420
million annually by 2020. (This estimate does not take
into consideration the increasing trend in gas tax
revenues, and could also be affected by changes in gasoline
prices and/or the tax rate.) In addition, there are
unknown, potentially significant, cost pressures for
implementation of petroleum demand reduction measures.
Increased costs should be offset, to some extent, by
petroleum cost savings.
NC:cm 8/14/04 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****