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Morning Must-Read: Severin Borenstein: Gas Prices Are Going Up, But It's a Small Price to Pay

Severin Borenstein: Gas prices are going up, but it's a small price to pay at the pump to address climate change: "Under California's cap-and-trade program...

...wholesale gasoline distributors... will have to buy... one emissions allowance for every metric ton of greenhouse gases you emit when you burn the gasoline.... At the current price of allowances... that works out to about 10 cents per gallon of gas.... Unfortunately, as the date for expanding cap-and-trade to transportation fuels approaches, both the program's opponents and supporters have been exaggerating how much or little impact it will have....

The oil lobby... is claiming that the change will raise gas prices 16 to 76 cents... based on two analyses that were done many years ago.... The oil industry knows what allowances actually sell for today.... But they are choosing to stick with the outdated--and scarier--estimates.... Some proponents... are saying that Big Oil is not required by law to raise its prices, so it will be its own choice if it does, not the fault of the cap-and-trade program. This is just as disingenuous....

By establishing a price for emissions, California sends a signal to the rest of the country and the world that we recognize the risk of climate change and are willing to take actions to address it.... No one thinks California's climate change program alone will solve this global problem, but if advanced economies like ours aren't willing to step up, there will be no solution at all.

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