In 2008, President Obama said that, “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” That’s exactly what’s happened in California to energy costs broadly.
The Washington Post recently ran an op-ed by Dominic Pino arguing that California’s cap-and-trade program is responsible for the state’s high and volatile gas prices. If gubernatorial hopeful and sitting senator Michael Bennet makes good on his campaign promise to implement a “cap-and-invest,” program, Colorado could join California near the top of gas price rankings.
Cap-and-trade, as it is traditionally known, sets a limit on total greenhouse gas emissions in an economy over time. Companies must purchase and trade emissions allowances, which shrink toward a goal and get progressively more expensive.
About 25 years ago, California gas prices were only about 35 cents above the national average, after adjusting for inflation, due mostly to higher gas taxes. Last week, Californians were paying an average of $4.42 per gallon for regular gas and $4.86 for diesel. California’s gas prices are currently so far above the rest of the country that they single-handedly drag the entire West Coast regional average a dollar higher than every other region in the nation.
The op-ed in the Post describes several reasons for this, including California’s high gas tax of 70.92 cents per gallon, a state-mandated fuel blend that has isolated the state’s market from national supply chains, and a consolidated refining industry thanks to hostile regulations.
Other blue states have high gas taxes and regulatory burdens, too, but their prices are nowhere near California’s. The distinguishing variable is that California and Washington are the only two states that impose a cap-and-trade system on emissions in their entire economies.
The Post op-ed cites the California Legislative Analyst’s Office, which attributes the cap-and-trade program as adding about 23 cents per gallon in costs to California. It may well be higher, as the Washington Policy Center has estimated that Washington’s cap-and-trade program added about 43 cents per gallon in costs in just its first year.
Coloradans were paying only $2.70 per gallon last week, on average. That’s real savings for consumers. But it might not stay that way if Bennet implements his “Colorado Clean Air, Affordable Energy Plan.” It’s thin on mechanics, but the plan promises to implement a “clear, enforceable cap on emissions across major economic sectors,” and to “reinvest revenues” into “lowering bills” and “supporting clean energy technology and jobs.”
California and Washington made similar promises, but in Washington, more than 70 percent of expenditures went to government and planning, not real-world benefits. Promising to “invest” the proceeds of a tax doesn’t negate the impact of the “cap” side.
Cap-and-trade raises the price of fuel and hits hardest the people least able to absorb the difference — those with long commutes, families in rural areas, and small businesses. These are the same people who may not be able to afford to replace their car with an electric vehicle and opt out of cap-and-trade taxation.
Cap-and-trade proved so politically toxic on cost grounds that even a Democratic-led state couldn’t sustain it. In November 2025, Pennsylvania Governor Josh Shapiro, facing a 135-day budget impasse, agreed to pull the state out of the Regional Greenhouse Gas Initiative (RGGI), a multistate cap-and-trade program in the Northeast. Some estimate that implementing RGGI in Pennsylvania would increase family electricity costs by 30 percent or more and jeopardize the state’s reliability.
Even Governor Jared Polis has resisted the idea of cap-and-trade, saying that “it is not an appropriate policy for Colorado.” Colorado doesn’t have to replicate California’s policy choices to understand that cap-and-trade would cause prices to “necessarily skyrocket.”
