It’s no secret that the cost of living in Minnesota is becoming a burden for working-class families and seniors living on fixed incomes. Inflation acts as a hidden tax, reducing your purchasing power, making the cost of living more unaffordable. Real household income has fallen by 2.3%, according to the U.S. Census Bureau, with Minnesotans needing nearly $13,000 more to pay for the standard of living they enjoyed just a few short years ago.
Food, energy, and housing costs are all up year-over-year. And, according to the International Monetary Fund, food and energy prices in particular have helped drive the surging inflation we have seen over the past several years. This should come as no surprise because everyone requires energy to heat and cool their homes, drive to work, and run to the grocery store to buy food.
Yet, food, too, requires energy. Natural gas is used to produce fertilizer and dry crops, electricity powers irrigation systems, and farmers rely on significant amounts of gasoline and diesel — about 6 gallons per acre just for corn production — to bring crops to market. As a result, fuel and electricity account for about 15% of farm operating costs. All of which is priced into the food you buy at the grocery store and when dining out.
The hidden tax of inflation is everywhere. And, if some in the Minnesota Legislature have their way, this hidden tax will be paltry in comparison to the hidden tax on gas and diesel they want to enact on families, farmers and small businesses across the state.
Modeled after California’s Low Carbon Fuel Standard, the Clean Transportation Standard Act (SF 2584) introduced in the Minnesota Legislature — as currently drafted — could increase fuel prices significantly. Last year, the California Air Resources Board (an official agency of the State of California) analyzed the California policy this bill is modeled on. CARB determined California policies could “potentially increase the price of gasoline by $1.15 per gallon, potentially increase the price of diesel by $1.50 per gallon and fossil jet fuel by $1.21 per gallon.”
In fact, an independent analysis has estimated that Minnesota’s proposed bill would see gas prices increase up to 94 cents and diesel prices increase up to $1.05 by 2030. Consider, a conservative 50 cent increase would cost Minnesota drivers upwards of $425 per year.
Is this something you can afford? Is this something your friends and neighbors can afford?
Because the impacts do not affect everyone equally. It disproportionately impacts those living in rural areas who depend on their vehicles for daily tasks and lack alternative transportation options. And, it disproportionately impacts low-income families who already spend a larger share of their income on transportation, consuming over 10% of their household budget.
Inflation is hard enough on Minnesotans. Why do some legislators want to make it even harder just to get by? There are better ways to achieve our goals than S.F. 2584. Let’s learn from California’s failed policies.
Chris Ventura is the Midwest executive director of the Consumer Energy Alliance.
