Economic Impact Analysis

In response to questions and concerns about the proposed CEI Hub regulations and the possible impact on future fuel supplies, the Bureau of Planning and Sustainability commissioned ECOnorthwest for an independent evaluation of the fuel demand model that BPS used to develop the proposed regulations and an economic assessment to understand how fuel prices might impact Oregon's economy. ECOnorthwest produced two memos: 1) a review of the fuel demand model; and 2) an analysis of the impact of incremental fuel price increases on Oregon's economy.

Fuel demand model review

View the Model Review

The fuel demand model provides a key analysis that helps to inform decision makers. The model evaluates whether existing fuel storage capacity at the CEI Hub would be sufficient to meet forecasted liquid fuel demand under the proposed regulations.

The fuel demand model review indicates that the model is a good starting point for understanding future liquid fuel demand. It takes in a wide range of factors, including population growth, fuel efficiency improvements, electric vehicle conversation rates and policy implementation scenarios. Given the available data, ECOnorthwest finds that a potential outcome is that the proposed regulations will not impact the price of fuel.  

Limitations with the model include:

• Uncertainty in demographic and technological change  
• The lack of data related to the speed at which fuel terminals can replenish fuel supplies
• Limited understanding of how easily facilities can switch between fuel types
• Consideration of seasonal demand

ECONorthwest also notes that storage capacity is not the sole factor in determining fuel supply or price impacts.  

Fuel price impacts

View the Fuel Price Impacts Analysis

The second memo explores the economic effects of hypothetical fuel cost increases ranging from modest to severe. The CEI Hub in northwest Portland serves as the primary entry point for more than 90 percent of the state's fuel supply, meaning that any disruption to Hub operations, whether from policy changes, infrastructure constraints, or external market shocks, has the potential to affect fuel availability and pricing. Increases in fuel prices do not stay contained to the pump. They transmit through the broader economy, affecting business costs, consumer spending, and regional employment.

ECOnorthwest analyzes what higher fuel costs could mean for Oregon under a range of scenarios. Three findings stand out:

1. The economic consequences of fuel cost increases depend on both magnitude and duration. A temporary shock imposes a meaningful but recoverable burden on employment, output, and household income. A sustained increase compounds over time, embedding higher costs across the economy in ways that are progressively harder to reverse.  
2. Consumers bear the initial burden, particularly lower-income households for whom fuel represents a disproportionate share of take-home pay. The rest of Oregon faces more exposure than the Portland Metro area given its more fuel-intensive economic base.  
3. Oregon ranks among the most expensive in the country for fuel, meaning that any localized increase in the price level carries competitive implications and fall on an economy that has limited room to absorb additional cost pressure.

Fuel price scenarios

ECOnorthwest analyzed two scenarios: a sustained one percent price shock, and a sustained 10 percent increase in the fuel price level.

Sustained one percent scenario

This analysis found that a sustained one percent increase in fuel prices over a 15-year period would result in a cumulative GDP decrease of .022 percent, or $1.15 billion. This would result in the loss of 475 jobs – a relatively small amount compared to 1.98 million jobs Oregon had in 2025.

Sustained 10 percent scenario

A sustained 10 percent increase in fuel prices over a 15-year period would result in a slightly greater GDP decrease of $10.99 billion, or .21 percent. This scenario would also result in greater job losses - 4,550.  

Behavior changes

ECOnorthwest also notes that sustained fuel price increases also tend to accelerate changes in behavior and the transition to alternative technologies (e.g. electric vehicles) that reduce fuel demand and exposure to fuel price volatility. How quickly Oregon's clean energy transition proceeds will determine the degree to which Oregon is vulnerable to supply shocks and price increases.