New cap and trade law expected to increase California gas prices

FRESNO, Calif. (KFSN) -- After months of seeing gas prices sink ever lower, Californians will ring in 2015 by paying more at the pump as a result of the state's landmark greenhouse-gas emissions law.

Starting Thursday, gasoline and diesel producers will be subject to the state's cap-and-trade system, forcing them either to supply lower-carbon fuels -- which are more expensive to produce -- or to buy pollution permits for the greenhouse gases created when the fuel is burned. In the short term, at least, that will mean higher prices at the pump.

Tax groups predict it will be a major story in 2015. "And the costs that we pay in California for a gallon of gas relevant to other states is gonna be even wider next year than it will be this year," said Jon Coupal, Howard Jarvis Taxpayer's Association .

Experts are predicting gas prices will increase around 9 or 10 cents per gallon. The California Air Resources Board says if prices don't jump tomorrow, it won't be long after that.