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California

Blame California Politicians for the State's Sky-High Gasoline Prices

Taxes and regulations pinch supply and hike prices at the pump.

J.D. Tuccille | 7.11.2025 7:00 AM

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The sign at a Chevron station in Walnut Creek, California. Gas is priced between $5.09 and $5.47 per gallon, and $4.99 for diesel. | Gado Images/Smith Collection/Gado/Sipa USA/Newscom
(Gado Images/Smith Collection/Gado/Sipa USA/Newscom)

If you've driven in California and pulled into a gas station to fill the tank, you know the Golden State's gasoline market exists in some realm parallel to but separate from the rest of the country, with fuel priced as if the place was the setting for a Mad Max movie (OK, some parts sort of are). As I write, the average price for gasoline in the U.S. is $3.17 per gallon, but Californians are somehow paying $4.53. Given the state just raised fuel tax rates, those prices aren't going down any time soon. In fact, Californians can blame state officials overall for the high cost of filling a car.

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Highest Gasoline Tax in the Country

"Californians pay an additional 72.4 cents per gallon at the pump attributable to state and local taxes and fees, which is the highest in the nation," according to the California Tax Foundation. "California's state excise on gasoline is 57.9 cents per gallon (as of July 1, 2023)."

Since that data was published, gas taxes have gone up further, most recently rising to 61.2 cents per gallon on July 1, up from 59.6 cents per gallon. The state's gasoline tax frequently rises since it's automatically adjusted for inflation every year. Ten years ago, it was 30 cents per gallon. And of course, prices at the pump rise accordingly.

But that's not all that happened on July 1 that's of interest to California drivers.

"On the same day, changes to the state's Low Carbon Fuel Standard (LCFS) were implemented, which will likely increase the cost of fuel even further," Kristian Fors and Sean Brenot noted for the Independent Institute. "The LCFS was approved in 2009 and requires bulk fuel suppliers to adhere to specific 'carbon intensity benchmarks.' To comply with these requirements, these sellers must reduce emissions from their supply chains or purchase credits from companies that sell lower-carbon fuels and generate LCFS credits."

Environmental Rules Drive Up the Price

The LCFS isn't a tax, as such, but it's a regulatory requirement that adds costs to the process of delivering fuel to consumers. That ultimately raises prices at the pump. Even before the recent regulatory change, the California Legislature's Nonpartisan Fiscal and Policy Advisor estimated that the state's "low carbon fuel standard program that requires suppliers of high carbon fuels (such as gasoline) to purchase credits from suppliers of low carbon fuels (such as renewable diesel)…currently adds 8 cents per gallon to gasoline prices."

Additionally, the Nonpartisan Fiscal and Policy Advisor emphasized that "the state's cap-and-trade program affects gasoline prices because it requires fuel suppliers to purchase permits that cover the greenhouse gases emitted when the fuel is burned. We estimate that this currently adds 23 cents per gallon to the price of gasoline."

Democratic Gov. Gavin Newsom's office says the revised LCFS could increase gasoline prices between 5 and 8 cents per gallon and that this is a good thing. But, as Fors and Brenot point out, the University of Pennsylvania's Kleinman Center for Energy Policy predicts that "retail gasoline price impacts could be $0.65 per gallon in the near term, $0.85 per gallon by 2030, and nearly $1.50 per gallon by 2035." Admittedly, that's a worst-case scenario. The Kleinman Center allows that the regulatory change could result in lower near-term price increases of 26 cents per gallon, rising to 60 cents per gallon by 2035. The governor's office denies this, implicitly conceding such high prices might be too much of a "good" thing.

Drawing on an earlier Independent Institute report, Fors and Brenot also caution that California has effectively walled its market off from fuel produced elsewhere. They write that, despite bordering other states from which fuel could theoretically flow to satisfy demand and lower prices, California policies have made the state an "island" because of "capacity constraints on California's pipelines and the state's stringent environmental fuel standards, which effectively require fuel to be refined in-state and limit the ability to import fuel from other regions."

Which is to say, California isn't some magic place where the laws of supply and demand work differently or not at all; it's an unfortunate jurisdiction governed by politicians who impose taxes and regulations that make life more difficult and increasingly expensive. Not that state officials are about to admit anything of the sort.

If There's Any "Price Gouging," It's by Politicians

Last fall, Newsom frantically insisted that "big oil companies are in cahoots with Donald Trump pushing prices even higher during election season."

In response, David Lightman observed for The Sacramento Bee that "there's no evidence that oil companies have engaged in any such quick price adjustments just before an election this month, or for that matter in this century."

Apparently, it doesn't even take an imminent election for companies to scheme. Months earlier, Newsom blamed California's high gasoline prices on "price gouging" by the oil industry. That was a year and a half after he signed a law that was supposed to end allegedly greed-driven price hikes by petroleum companies.

"Following record gas price hikes and profits, Governor Newsom signed his special session bill to hold Big Oil accountable," his office boasted on March 28, 2023.

To judge by his later claims, the legislation was ineffective. Really though, it was complete garbage intended to divert public attention from the impact of idiotic state policies on prices at the pump.

"Two years after California's Democratic leaders declared victory over big oil with a law aiming to crack down on industry profits, the state has been unable to prove companies engage in price gouging when the cost of gasoline spikes in California," Nicole Nixon reported in March of this year for The Sacramento Bee. In fact, she added, data showed that "two refiners had five consecutive months of negative margins, with losses ranging between nine and 44 cents per gallon."

No wonder petroleum companies have been closing refineries in California, further reducing supply in the closed market.

So, when you line up at the pump in California (I've seen people coast into Arizona on fumes to fill up on the cheaper side of the border), remember who lightened your wallet for you. You can blame California's political leaders.

The Rattler is a weekly newsletter from J.D. Tuccille. If you care about government overreach and tangible threats to everyday liberty, this is for you.

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NEXT: Review: The Endless Summer Chases the Perfect Surf Conditions Around the Globe

J.D. Tuccille is a contributing editor at Reason.

CaliforniaGas TaxesGasolineOil pricesAutomobiles
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  1. JohannesDinkle   10 hours ago

    Most Californians have missed the news that the Phillips refinery in Wilmington, near the LA harbor, and the Valero refinery in Benicia, at the northeast end of the SF bay, are closing down in 2026. They account between them for about 18% of the state refining capacity.
    If refiners are just greedy bastards, coining money, they why shut down? We can expect the state Democrats to come to some explanation for higher costs and occasional shortages that blames the remaining refiners.

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    1. Eeyore   7 hours ago

      AB1366

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  2. sarcasmic   10 hours ago

    These taxes raise prices because they're Democrat taxes. If Trump was to raise taxes on gas it would have no effect on price.

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    1. VULGAR MADMAN   9 hours ago

      Still no cure for retardation. Sad.

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      1. JohnZ   9 hours ago

        The people of Cali voted for this.

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    2. JesseAz (Prime Meanster of Sarcasia)   9 hours ago

      You've argued for a month to raise income taxes by 4T over 10.

      You also just posted an article yesterday showing there wasn't a price increase.

      God damn you're a clown.

      Log in to Reply
    3. Neutral not Neutered   7 hours ago

      On one hand you say a tariff is a tax that causes inflation which is not necessarily true in all instances and yet now to you try to argue that this is not actually raising prices and causing inflation when clearly that is what it's purpose is? SMH

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  3. JohnZ   9 hours ago

    The people of that state voted for it and they got it good and hard. I have no sympathy what so ever for the citizens of that state except for those who refused to vote for democrats.
    Increased fuel prices mean everything else including food will increase in costs. Did they ever consider that when raising fuel prices? Obviously not.
    But hey, all they have to do now is vote in a Communist for governor and mayor like they're doing in New York City.
    Everything will be just peachy keen.

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  4. tracerv   9 hours ago

    HaHa.

    Nelson Muntz

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  5. Spiritus Mundi   9 hours ago

    Don't tell me my business devil woman. I will blame whatever I want. And I blame Trump, capitalism, and of course tariffs! (Honorable mention to global warming, racism, and xenophobia).

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    1. Outlaw Josey Wales   5 hours ago

      You forgot Putin and his price hike.

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  6. Eeyore   7 hours ago

    The California state legislature passed a law to eliminate non zero emissions vehicles by 2015 - way back when Gore said we would all be dead by then. It seems like the problem isn't the price if gas - it is lack of dedication to the original goal of killing everyone.

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  7. Kungpowderfinger   7 hours ago

    Luckily the Democrats don’t have any plans to make the rest of the country just like California.

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  8. Neutral not Neutered   7 hours ago

    Wow. The assumptions are so outlandish it's hard to believe Reason would print them without at least recognizing and noting the distortions.

    Fuel, alcohol and cigarette taxes are fast revenue when added. California is spending more than it takes in and with the mass exodus the revenues have declined and they need a quick fix. Since fuel prices have gone down because of President Trump and the GOP policies, Newsome as most leftists do, sees an avenue where they can justify keeping the fuel prices where they were since people have become accustomed to paying these high prices.

    The whole time it has been the democrats who invested into oil and gas and then implemented their policies which raised the price of oil and gas to which they profit heavily while decreeing they are against it. This also benefitted foreign actors they have aligned with that hate America and want to see it collapse.

    It's sad how democrat leaders and their agenda is Anti American. They want to fundamentally transform America into just another failed social state so they can rule forever. It's like the leaders are jealous of the power of Xi and want to be him.

    The federal government removed the climate agenda. Time to step on California to follow through and help the people by removing this nonsensical carbon agenda and drastically reduce the cost of living.

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  9. jonnysage   5 hours ago

    Why would Californians complain about gas prices? They dont want to use gas. Higher gas prices is a GOOD thing. Go buy an electric car,bus,motorcycle,boat,airplane,train,power tools, generator,semitruck. Win Win.

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  10. NoVaNick   4 hours ago

    Was in the Bay Area about two years ago and noticed relatively few EVs despite the insane gas taxes. In fact, there are a lot more EVs here in the DC metro area than I saw in California and gas costs about $3/gallon here right now.
    So Californians seem happy to continue paying these taxes instead of switching to EVs.

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