The California Department of Transportation is testing a fee per vehicle mile program (Road Charge). It’s a pilot program at this time and was populated by paid volunteers starting in June 2024 and will last 6 months. The goal of California government and transportation officials is to soon pass a statewide law to collect more money from vehicle drivers. Although they claim this is not a tax increase and they call it a fee, it will have the exact same impact on vehicle drivers’ wallets. After the 6-month pilot program is complete, it the California Legislature will decide if the Road Charge could or should actually replace the gas tax.
The reason stated for this per mile fee is that the increasing number of California’s electric vehicles are not paying for wear and tear on the road through the current gas tax. But electric vehicle owners do pay an annual fee for road repair and maintenance.
Here are several questions to ask yourself while reading this article, then you may want to talk to your friends and coworkers about what California politicians and transportation officials ought to do.
- When California passes a new and additional way to tax drivers, will they eliminate the gas tax, the diesel tax and (for electric vehicles) the annual road maintenance fee? Or will it be an additional source of revenue for the state with less accountability?
- With the highest gas tax of all the states in the USA and the highest state income tax (California 13.3%, New York 8.82%), why does California always rate as one of the very worst states (46th currently) in the country for the quality and maintenance of our roads?
- The California electric grid infrastructure must be able to service 12.5 million EVs (12 times the number of EVs in 2022) by 2035. If there is an electric grid blackout, how will California electric vehicle drivers be able to charge their vehicles to get to work, do their errands, make their deliveries to businesses and consumers or leave in an emergency. And how will the fire department, police and other emergency services, utility services, etc. be able to charge their vehicles to go out to help the public and businesses in an emergency?
The California Air Resources Board issued a 10-day alert in August 2023 during a heat wave. The Governor pleaded with Californians not to charge their EVs during peak hours as they projected the electrical grid could not handle it. Why is California requiring drivers to buy more electric cars if the grid couldn’t even supply enough power to make it through the summer?
- How will this huge increase in the demand/need of the electrical grid be paid for? It will have to grow from 50-gigawatts to 120 gigawatts (latimes.com). That is a 240% increase. A gas tax or fee per mile fee will not be enough to pay for it. Fuel taxes and fees must be used for road construction. maintenance, and repairs.
California overspent by $160 billion in the last 2 years and is now in an estimated $58 billion deficit. There is no existing surplus to pay for expanding the electric grid. If utilities have to shoulder the load for this massive expansion, how will this not lead to large energy bill increases for all consumers and businesses?
- What is California doing to harden its electrical grid? If the grid goes down, even if for just a few days from an emergency, how will California avoid chaos after 2035 when EV drivers cannot charge their cars and trucks and people cannot power their homes and businesses?
- Currently the cost to charge EVs in California average 50 cent per KWh. This is lower than the cost to fuel a gas-powered vehicle. However, cost of California electrical utility power is accelerating upward. How long will it be until charging electrical vehicle costs as much or more than to fuel a gas-powered vehicle
- Did you know that owning an EV averages 20% more for annual insurance and costs more to repair from accidents than gas powered vehicles? Also, an EV battery replacement cost between $3500 and $20,000.
The national average cost range for an EV charging station installation at home is between $1,000 and $2,500. And what if you rent? Can you take the charging station with you if you move?
- Solar and wind energy system equipment will need to be replaced every 20 to 40 years. Are we, as consumers, prepared to replace worn out solar panels for our homes? How much will taxes go up in order to pay to replace state sponsored mass solar and wind systems? Did you know that, although many solar panel and wind turbine blades are recyclable, 90% of them are tossed into landfills because they are too expensive to recycle (energytheory.com)?
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Is this fee charged per vehicle or is the fee attached to a person, no matter what vehicle they drive? If it will be an app on our mobile phones, will it be able to stop monitoring if you are not the person driving? If it can’t stop monitoring what happens when a person carrying their phone is a passenger in a vehicle? Or traveling on a bus? Or taking an UBER? Will they be charged the user fee as well as the driver?
These questions and more need to be answered. California government agencies pride themselves as being leaders in “fighting climate change and going green.” However, California taxpayers need to know the honest projected costs they will bear by following the written California energy laws and policies. There may be more cost-effective ways to achieve the goals. Other competing sources for solutions need to be considered and not pushed aside by strong lobbyist influence. We need to develop solutions that effectively solve the problem and as economically as possible.
In 2021, 50% of California electricity was supplied by natural gas, 8.5% from nuclear, 7.5% from large and small hydroelectric, solar 17%, wind 7.8%, and less than 10% from other sources. https://www.energy.ca.gov/data-reports/energy-almanac/california-electricity-data/2021-total-system-electric-generation
In 10.5 years, solar and wind energy production will have to replace 50% of power currently imported from out-of-state natural gas power plants. The other non-fossil energy sources (hydroelectric, nuclear, geothermal) are fixed and not likely to receive any significant new investment.
The Public Utilities Commission in late 2022 cut by 75% the rate that utilities pay California homeowners when they sell surplus power to the electrical grid. So, new homeowner solar panel installations are currently down about 25% because the incentive has been gutted.
How Much More Will Drivers Pay for This Mileage Fee Than They Pay for Fuel Now?
California’s has a high excise tax on fuels (about 59.6 cents a gallon for gasoline and 44 cents a gallon for diesel). About 80% of highway and road repairs are paid by the state gas tax says the California Department of Transportation. These taxes are used to build and maintain roads, mass transit, airports, and waterways. Diesel fuel tax revenue is deposited into the State Transportation Fund, for building and maintaining roads and mass transit. Lauren Prehoda of Caltrans said the cost of maintaining roads is $8 billion to $9 billion annually.
Governor Gavin Newsom’s 2022–23 Proposed Budget stated the vehicle fuel taxes provided $6.5 billion in revenue in 2021–22 and an estimated $7.4 billion for 2022–23. Diesel fuel taxes provided $1.269 billion in 2021–22, with an estimated $1.4 billion for 2022-23.
California charges $118 per year to those who own electric powered vehicles; a transportation improvement fee to all drivers; and weight fees for commercial truck drivers. Some counties charge sales tax, bridge tolls or highway tolls, which fund road maintenance or transit services funding (driving.ca). “On the average, Californians currently pay about $300 a year in state gas taxes,” Prehoda said. However, people who drive more will pay more.
If you drive 1000 miles per month, get 22 miles per gallon and use regular (non-diesel) fuel and the per mile fee is 2 cents per mile, then you would pay $20 per month. If the Road Fee was 3 cents per mile, the amount would be $30 per month. And at 4 cents per mile $40 per month. Currently, you’re paying a gas tax of $27.09 per month at .596 cents per gallon. https://caroadcharge.com/
What is the Essence of the Law Behind This Proposed Road Charge?
On September 23, 2020, Governor Newsom signed EXECUTIVE ORDER N-79-20. “It shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks.”
California gas tax revenues will continue to shrink if drivers continue to buy EVs instead of gas- or diesel-powered vehicles. This executive order will force people to buy only EVs. The Executive Order does not appear to ban people from selling or buying used gas-powered vehicles after 2035.
The Actual Cost Breakdown for Gasoline in California Compared to the National Average
As of May 27, 2024, the national average price per gallon of gas was $3.70 (ycharts.com). On the same day the cost for gas per gallon in California was $4.89 (energy.ca.gov)
The total cost breakdown per gallon of gas by the California Energy Commission as of May 27, 2024:
Distribution, Marketing, and Profits $0.72 Refinery Costs and Profits $0.73 Crude Oil Cost $2.02 State Underground Storage Tank Fee $0.02 State and Local Taxes $0.11 Environmental Programs $0.53 State Excise Tax $0.58 Federal Excise Tax $0.18 Average Retail Price $4.89
$4.89 – $3.70 = $1.19 more per gallon of gas in California than the National average.
California Gas Excise tax increased to 59.6 cents per gallon as of 7/1/24 according to California Taxpayers Foundation. This gas tax goes up every July as per SB1 enacted by California Legislation in 2017.
California Vehicles Registered in 2022 (afdc.energy.gov):
Electric (EV) 903,600 Hydrogen 14,900 Methanol 0 Gasoline 31,059,000 Diesel 725,300
How Many Miles, on the Average, Do People Drive Their Vehicles in California Each Year?
According to the US Department of Transportation Federal Highway Administration’s 2022 data, drivers in California drove an average of 14,489 miles.
Many sources claim that diesel-powered vehicles have better mileage than gas powered vehicles. It is estimated that diesel-powered vehicles in California in 2022 may have traveled an average of 20,000 to 25,000 miles per year.
There does not appear to be easily available statistics on miles driven on California roads by tourists, delivery trucks from other states or other out of state vehicles.
The proposed Road Charge does not address how these out-of-state drivers will pay for road maintenance costs unless the state of California keeps the gas excise tax in place. So how will this issue be addressed? Shouldn’t out-of-state drivers who are using California roads also help pay for road maintenance and repairs?
Has California Ever Reduced Statewide Taxes?
The last time there was a tax decrease was in 1978 with the citizen-based initiative Proposition 13, which limited the amount that the state of California could increase property taxes on property purchased prior to 1978.
It is unknown if California legislators would remove the excise tax on gas and diesel fuel if the Road Fee proposal passes.
The High Cost of Imported Crude Oil for Use in California
There are no crude oil pipelines from other states into California. Regulatory approvals make this a huge legal and economic obstacle.
Rail transport of crude oil to California is extremely expensive and has little political support. 243,000 additional rail cars would be needed to meet demand. There are too few trucks available to deliver the crude oil to meet demand. (energyindependenceca.com).
In 1984 California imported 5% of its oil. In 2023 it imported 76.6%. This is mostly from foreign nations with a much lower percentage coming from Alaska (by tanker ship) which makes it cost more (energy.ca.gov).
The following link is to a list of the foreign nations that sell crude oil to California and the percentage of oil they supply. Importing foreign oil costs consumers more in shipping and creates more air pollution from shipping the oil on tankers from overseas. https://www.energy.ca.gov/data-reports/energy-almanac/californias-petroleum-market/foreign-sources-crude-oil-imports
Refineries are Overregulated. The Last Time a Permit Was Granted to Build a New Refinery in California was 1978.
Since 2010 California lost 33% of its oil refinery production capacity.
The last large production oil refinery was built in 1969 and it currently remains open. This refinery is the Wilmington Refinery in Valejo, producing 85,000 barrels a day (energy.ca.gov)
A California Road Charge Could Potentially Invade Our Privacy
The proposed methods for tracking vehicle mileage include: 1) Transponders installed on every vehicle; 2) Installed Tracking Apps on mobile phones; and/or 3) A government agency that would inspect vehicle odometer readings every year.
The collection and storage of personal data would also be required on: 1) Odometer mileage; 2) Driving habits; 3) Driver locational data.
What Are the Projected Costs to Drivers from the Proposed California Road Charge?
The proposed California Road Charge is expected to be around 3 cents per mile.
In 10 years, California may experience a $4.4 billion shortage from less gas tax revenue, which would likely increase the Road Charge fee.
How is the proposed Road Charge not really a tax? The proposed mileage tax (Road Charge) is called a user fee instead of a tax. The fee is directly related to the usage of the roads and infrastructure, and not a general revenue-generating measure, or tax. But again, the impact is the same on the driver’s wallet.
California is Rated Number 46 in Terms of the Quality of its Roads
American Society of Civil Engineers investigated road conditions nationwide and rated each state. California has 195,834 miles of public roads and only 50% are rated in good condition. A Munley Law study of U.S. Bureau of Transportation Statistics revealed the three states with the highest quality roads were Idaho: 94.78%; Georgia: 95.5%; and Tennessee: 94.17%.
California Electric Grid is Completely Inadequate to Meet the Demand of EV use by 2035.
According to CalMatters.org, as of 2022, electrical vehicles used 1.9% of California’s electric grid annual baseline consumption. California estimated that electrical vehicles would use 21.9% of annual baseline consumption by 2035.
A study commissioned by San Diego Gas & Electric stated that between 2020 and 2045 the electricity used by Californians is expected to increase 96%, peak hour use is projected to increase 60%.
How Can California Provide Power for 12.5 Million Electric Vehicles Expected on California’s Roads in 2035 When it Already Had 903,600 EVs in 2022?
California will need to increase its power generation capacity by 250% and add new solar and wind energy power systems at almost 500% the rate of the last 10 years combined. According to the LA Times in a January 2024 article, California’s power system is 50-gigawatts but must be built up to 120 gigawatts to accommodate for the fossil-free energy resources they hope will be in place to meet the state’s 2045 energy goal.
The Air Resources Board enacted the new mandate in August 2023— and just six days later, California’s power grid was so taxed by heat waves that an unprecedented 10-day emergency alert warned residents to cut electricity use or face outages. The juxtaposition of the mandate and the grid crisis sparked widespread skepticism and concern.
What is California Doing to Harden its Electrical Grid?
Hardening the electric grid would allow it to be able to withstand the following: huge solar flares, large EMP impulses from foreign weapons exploded in the high atmosphere, terrorist attacks on local electrical stations, and disruption from wildfires and heat waves. The California Public Utilities Commission (CPUC) approved a long-term underground power line program. Major utilities can propose 10-year plans to harden the grid against wildfire risks while reducing costs through economies of scale. Utilities appear to be focusing on measures to protect stations, transformers and wires from wildfires such as installing covered conductors, steel poles, and putting some power lines underground.
Newsweek reported on January 9, 2023, that the Department of Energy data revealed 100 reported attacks and strange activities at U.S. power stations that occurred during the first eight months of 2022. Federal officials did not release specifics of who the perpetrators may have been, but they said there were “credible, specific plans” by violent domestic groups to attack the United States power grids.
There are Too Many Unanswered Questions
As California politicians and government agencies rush to save the world from climate change, they are making the great assumption that they are 100% on the correct path. What is the California backup plan for sources fuel and energy if all vehicles are electric and the power grid has a blackout or the grid has a massive failure (EMP or sabotage) that takes months, to repair? How will California pay for the required 250% increase in capacity of the power grid? Isn’t hardening the grid more important to ensure electric power to citizens and businesses than to meet an arbitrary date of being “carbon free”?
California has a habit of adding more taxes on top of other taxes. Will California legislature and agencies publish and make easily available for comment by citizens and business owners the separate and total projected costs related to California fuel and energy production and the taxes required to pay for these costs?
These questions will not be fully answered without pressure from voters upon legislative and government agency officials.
