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California’s Gas Prices: The Highest In The United States

Introduction

California gas prices are the highest gas prices in the United States, with a state average of $6.16 per gallon compared to the national average of $4.96. A Chevron gas station in Los Angeles even reached $8.05 per gallon: the highest charging gas station in the country. This has caused Californians to erupt in an uproar, causing both the Democratic and Republican parties to propose solutions to help struggling Californians with these heightened gas prices.

Why are California’s Gas Prices So High?

  • California Specific Reasons

Overall, gas prices in California tend to be higher than most states partially because of higher infrastructure- and environmental-related taxes. California’s lawmakers increased the gas tax by 12 cents after a battle in 2017 to pay for roads, bridges, transit projects, and more public projects. Recent causes in the increase in gas prices are Russia’s invasion of Ukraine and the sanctions that followed the invasion and demand for oil skyrocketing from pandemic lows faster than supply could increase. Furthermore, California’s gas tax has a ‘mystery surcharge’ as UC Berkeley professor Severin Borenstein calls it. This extra 30 cents a gallon that has been tacked on California’s gas tax costs Californians an unexplainable $4 billion per year.

  • National & International Reasons

The decision of many countries, including the US, to cease oil imports from Russia has prompted the American Petroleum Institute, which is representative of all U.S. oil companies, to “urge policymakers to advance American energy leadership and expand domestic production to counter Russia’s influence in global energy markets” (press release). This has increased pressure on President Biden to turn on the oil spigot, especially in places such as California that have taken the hardest hit with regard to gas prices. However, oil executives have also cited that the increase in gas prices is in part due to pressure from shareholders to withhold spending on exploration and drilling and instead boost investor returns through share buybacks and dividends.

What Are California’s Lawmakers Doing About The Gas Price Outrage?

Governor Gavin Newsom proposed a plan that would give at least one $400 refund to each registered California vehicle owner, regardless of income. Refunds would be capped at $800 for Californians with more than one vehicle registered under their name. Newsom’s office also released a proposed legislative package of fuel price relief bills that incorporates $750 million in grants to public transit agencies in exchange for them providing free fares for three months. There would also be an elimination of the sales tax on diesel fuel for a year’s time and a pause in the increase in the excise tax on fuel that is supposed to occur in July. However, this proposal raises equity and ethical concerns for Democratic legislators, as it has been stated that it’s unjustifiable to refund money to Californians making a higher income while omitting some of the poorest Californians that don’t own a motor vehicle. Newsom said that a solution to curb refunds for drivers is to suspend payments for Californians with high-value vehicles who pay above a not yet determined quota in license fees. In total, Newsom’s plan would cost over $11 billion if refunds for all vehicle owners are included.

Conclusion

While there are efforts that California’s lawmakers can take to effectively mitigate California’s gas prices and internal economic problems, there are larger national and international events, economic issues, and political strife that are causing high gas prices in California. These causes are beyond the control of California’s lawmakers. An increase in gas prices has caused many people to leave California as the struggle to live comfortably and survive has become unbearable for some. Given that California’s primary elections were on June 7, a fresh set of government officials in California could mean a fresh change in California’s gas prices due to new legislation being implemented.

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