Washington state held its first cap-and-invest auction last month, and recent reports have stated nearly $300 million was spent by oil and gas companies bidding against each other to buy a limited amount of carbon emission allowances.

The state has a limit on the amount of carbon emissions released into the environment, making companies who wish to do business in Washington obtain allowances equal to their covered greenhouse gas emissions. These allowances can be obtained through quarterly auctions hosted by the Washington State Department of Ecology.

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“I’m fairly cynical about it because if you have a certain amount of credits that you can give out, or that they can be auctioned off and then sold on the secondary market, like a stock or a bond, and only a set amount of them are going out, that’s going to just cause gas prices to go up,” Jack Stine said on KIRO Newsradio.

The Department of Ecology confirmed allowances can also be bought and sold on a secondary market.

These companies will “pass the cost off to the consumer,” Stine said. “The most polite way to put this is they get hassled by the government to comply and then go, ‘well, because we’re a major corporation, we have to make a profit year over year as it pertains to our stockholders, so we’ll just pass the costs off.'”

The bidding lasted three hours, with the 6.18 million allowances —  each regulated business that emits over 25,000 metric tons of carbon annually is required to hold one allowance for every ton of greenhouse gas that it emits — were sold at a settlement price of $48.50, a number settled upon from its $ 22.20-floor price and its ceiling price of $81.47.

These auctions are projected to generate $1.7 billion in revenue.

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Todd Myers with The Washington Policy Center believes gas prices for consumers could climb by as much as 40 cents for gasoline and nearly 50 cents for diesel.

This amounts to about 39 cents per gallon for gasoline and 47 cents per gallon for diesel.

Also, this is significantly higher than the $31/metric ton that fuel distributors had been estimating so far.

I would expect to see gas prices go up over the next couple of weeks. #waleg https://t.co/5dnrmx72Od

— Todd Myers 🐟🌲🐝 (@WAPolicyGreen) March 7, 2023