California gas prices going up Jan. 1 due to cap-and-trade program

LOS ANGELES (KABC) -- Falling gas prices have been a joy to drivers this holiday season, but beginning Thursday, a price hike is coming.

"Every vendor, every truck that delivers, every item that we receive will have an increase because of that gas tax," said Carlos Galvan, Jr. of Amapola Markets.

Officially, it is not a tax, but it will feel like one. It springs from a measure to clean up the air in California.

Starting Jan. 1, gasoline and diesel will be subject to the state's cap-and-trade program. It means that gas and diesel industries will have to pay fees according to how much carbon pollution their products pump into the air.

Those fees will be passed to you, but the exact amount is unclear. Even the air resources board, which regulates pollution, says it is a guess.

"It's likely to translate to no more than $.10 a gallon," said Dave Clegern of the air resources board.

Critics fear a backlash from the oil industry. The worry is that fuel producers, who tried to halt the measure, may start a consumer revolt by slowing fuel production, inflating prices at the pump.

Advocates say there is an upside to the new program. The new fees will go to communities hardest hit by polluting industries.

As for the petroleum industries, they're issuing a warning that come Jan. 1, the fuel market will enter uncharted territory.