New pollution-fighting program will cause rise in gas prices

SAN JOSE, Calif. (KGO) -- For months, Californians have been taking advantage of lower prices at the pump, but new regulations in the Golden State could change all of that.

Starting Thursday, gasoline and diesel suppliers are now subject to California's Cap-and-Trade program, part of the state's landmark greenhouse gas emissions law. But what does it all mean?

Fuel suppliers, who are the people between the refineries and the gas stations, will come under the state's Cap-and-Trade program.

This will force them either to supply lower-carbon fuels, which costs more to make, or to buy a pollution permit of sorts for the greenhouse gases created when the fuel is burned.

The question now is if the cost of those carbon allowances will be passed on to the drivers.

Officials with the Air Resources Board say it's uncharted territory. "If that is a straight pass through, from what we can tell, it's likely to translate to no more than 10 cents a gallon," board member Dave Clegern said.

Officials insist the program will be good in the long run. "Really what Californians will get from this, ultimately, should be more stable fuel prices, hopefully lower fuel prices and more choices," Clegem said.

But some worry about backlash from the oil industry. Critics fear that fuel producers may slow down production, which could inflate prices at the pump.

"Whether we like it or not, we're living within these rules and boundaries," truck driver Douglas Albrecht said.

Albrecht hauls meat and produce across the country. He says any rise in the cost of fuel could mean a more expensive grocery bill for you, among other things.

"Higher costs across the board, it's out of our control. There's nothing we can do about it," Albrecht said.

Others like Calistoga resident Edgar Massoletti are just hoping for the best. "If it goes up 10 or 20 cents a gallon, it's fine. If it goes up a dollar a gallon, then it becomes prohibitive to travel," he said.

These drivers are already bracing for what's to come.

The cost for a gallon of gas is just under $3 at the Chevron in San Jose. But with Cap-and-Trade, state officials say we should expect these prices to start going up in the coming days.