June 8 (Bloomberg) -- U.S. House climate legislation may raise the cost of gasoline by as much as 77 cents per gallon, American Petroleum Institute President Jack Gerard said, basing the estimate on a Congressional Budget Office study.

“The study confirms the bill discriminates against ordinary Americans who depend on cars, trucks, trains and airplanes,” Gerard said in a written statement today.

The legislation would require refiners and manufactures to acquire carbon dioxide pollution allowances that could be traded on a market as part of an effort to cut emissions 17 percent below 2005 levels by 2020. The House Energy and Commerce Committee approved the bill May 21 and it is awaiting review by other panels.

The CBO study released June 5 said the measure would produce $845.6 billion in revenue and cost consumers $821.2 billion through 2019 in the form of free allowances for industry, tax breaks for low income households and investment in cleaner forms of energy.

U.S. Representative Ed Markey, a Massachusetts Democrat, who helped write the bill, said in a statement today that it will “get our planet out of the red, while helping to put our budget back in black,” Markey said. It’s a “ win-win for America’s economy and environment.”

Gerard said the measure puts too much burden on the oil and gas sector. It would raise the cost of a gallon of jet fuel by up to 83 cents per gallon and diesel fuel by 88 cents, said Gerard, who heads the oil and gas industry’s main trade association in Washington

The report estimates that allowances would cost $15 per ton of emissions in 2011 and rise to about $26 per ton in 2019.

Oil Consumers

“The $846 billion price tag on emission allowances - borne disproportionately by oil consumers -- will drive up costs of producing and refining gasoline, diesel and other fuel products while doing nothing to protect fuel consumers,” Gerard said.

House Republican Leader John Boehner’s office said in a statement that the measure creates “new national energy taxes that will affect every American” and “provides no relief for most of the middle class.”

Joseph Romm, who writes a climate blog for the Center for American Progress, a public policy research group in Washington, said the CBO report overestimates the price tag of the bill because it doesn’t consider mitigation measures to bring down costs.

“The permit prices are high by a factor of 60 to 80 percent,” Romm said of the CBO report. “That means they overestimate the cost of the bill,”

To contact the reporter on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net

Last Updated: June 8, 2009 18:05 EDT