Why is gas so much more expensive in California?
LOS ANGELES - It seems like California has always had significantly higher gas prices than the rest of the U.S., and with things like inflation and Russia's invasion of Ukraine increasing forcing prices to reach record highs, Californians are feeling it in their pockets more than ever. But why is gas in the Golden State so much more expensive than gas in other states? It mostly comes down to two things - taxes and environmental regulations.
As of June 28, the average price of a gallon of regular is $4.881 nationally, according to AAA. Meanwhile, California averages over $6 a gallon. In Los Angeles and Orange Counties, the average price has dropped 15 of the last 16 days, but prices still hover around $6.30 a gallon on average.
One of the biggest factors affecting that steep price tag is California's state excise gas tax. Data from the American Petroleum Institute shows Californians pay more than 68 cents per gallon between the state excise tax and other state fees and taxes, more than any other state. And that state tax is set to go up even more at the end of the week. The tax is programmed to go up annually, thanks to a 2017 state Senate bill, and effective July 1, the tax will go up from around 51 cents per gallon to just over 53.
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The second biggest thing pushing gas prices higher is the special blend of gasoline California uses to help limit greenhouse gas emissions. California refines and uses a particular blend of gasoline seasonally. Particularly the summer blend of gas California produces lowers what's called the Reid Vapor Pressure (RVP) of the gasoline. RVP affects how the gas evaporates. To put it simply — lower pressure equals less evaporation and therefore fewer emissions.
According to the California Department of Energy, California's lower-RVP gasoline has been a major factor in the reduction of smog in the state since 1990, but that comes at a cost. In order to produce this special blend, refineries need special equipment and use more expensive blending ingredients. The effect is an estimated 5-to-10-cent increase in price at the pump, according to the U.S. Department of Energy's Alternative Fuels Data Center.
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So is there any relief coming? There have been discussions about halting the state gas tax, as well as a proposal by California Gov. Gavin Newsom to give people money back specifically to pay for gas, but none of that has come to fruition. Instead, Newsom announced a plan earlier this week that would give Californians more than $1,000 in "inflation relief" checks, to deal with high prices at the pump and elsewhere. Nationally, President Joe Biden called on Congress to suspend federal gasoline and diesel taxes for three months. All those efforts would likely still result in high gas prices in California, but lower.
State Assembly Speaker Anthony Rendon last week also announced a bipartisan committee to investigate gas price gouging. State Republicans were critical of the plan, arguing the state tax should just be suspended, but back a 2019 review by state regulators suggested big oil companies were "misleading and overcharging" customers by as much as $1 per gallon. As if there weren't enough things pushing the price up already.
The Associated Press contributed to this report.