California has among the highest gas costs in the United States, according to AAA. According to the organization’s research, the national average cost of a gallon of standard unleaded gas was $3.40 on Thursday.
California had the highest average at $4.87, surpassing all other states.
According to the US Energy Information Administration, several factors influence how much drivers pay for gas, including refining expenses, taxes, distribution and marketing, and crude oil pricing.
High taxes are partially to blame in California. According to the EIA, the state has the nation’s highest gasoline taxes. But there’s more to this story.
An Isolated Market and a Unique Gasoline Blend
California needs a specific gasoline blend that minimizes emissions at a higher cost.
“California has also seen a 66% drop in the number of refineries in operation since 40 years ago,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “So there are fewer refineries producing this special blend of gasoline.”
California has an isolated refinery market. According to the California Energy Commission, the state’s 11 largest refineries manufacture the particular fuel blend used in California.
“Not many other states use the same blend of fuel, which limits California’s supply when there’s an outage, when there’s an issue at one of our refineries,” Anlleyn Venegas, a senior public relations expert at AAA, told CNBC.
Because the market is isolated, any interruptions may cause volatility in gasoline prices.
“Part of the reason why prices have been so high is that California has really restricted the ability for refineries to expand and grow,” De Haan said in a statement. “California has been rather hostile to refinery expansions or oil industry investments, trying to push them away and transition California to more electric vehicles.”
California intends to stop the sale of new gas-powered cars by 2035 as it converts to cleaner vehicles.
According to the California Energy Commission, zero-emission vehicles will account for one-quarter of new car sales in California in 2023.
“The high price of gasoline does encourage more EV adoption,” De Haan said in a statement. “Americans getting hit with $5 and $6 [per] gallon prices in California is likely accelerating the shift away.”
In 2023, California Governor Gavin Newsom enacted a new law to prevent claimed gas price gouging. The bill intends to promote transparency in the oil and gas business by establishing an independent watchdog known as the Division of Petroleum Market Oversight.
“There hasn’t really been much impact,” De Haan explained. “But I do believe that in the months ahead, there probably will be more … talk on this subject.”
If you want to read more recent news, you can check out our past articles:
- Gas and Power Rates in California Are Expected to Continue Increasing
- A New California Plan Will Let Gasoline Superusers Dump Their Aging Cars
- San Diego Gas Electric to Face Possible Replacement on November Ballot
Driving Habits and Smart Buying Can Reduce Fuel Expenditures
Families spend thousands of dollars on gasoline every year. The average annual spending per consumer unit on gasoline and other fuels in 2022 was $3,120, according to the Bureau of Labor Statistics. That figure was up 45.3% from 2021, as more individuals began commuting following the pandemic and fuel prices soared.
“Adopting new and improved driving behaviors can contribute to significant savings,” Venegas went on to say.
According to AAA, there are a few options for drivers who aren’t going electric to save money on gas:
- Shop around to find the lowest price.
- Keep up with vehicle maintenance
- Plan your route before going.
- Slow down and drive at the speed limit.
- Do not drive aggressively.
