Why gas is so expensive in California (2024)

California is home to some of the highest gas prices in the United States, according to AAA.

The national average for a gallon of regular unleaded was $3.40 as of Thursday, according to the organization's data. In California, the average was $4.87, more than any other state.

Several factors go into what drivers pay for gas, including refining costs, taxes, distribution and marketing, and crude oil prices, according to the U.S. Energy Information Administration.

High taxes are partly to blame in California. The state has the highest gasoline taxes in the nation, according to EIA.

But there's more to the story.

An isolated market and a special fuel blend

California requires a special blend of gasoline that reduces pollution — and costs more money.

"California also has seen a drop of 66% in the amount of refineries in operation from where we were 40 years ago," said Patrick De Haan, head of petroleum analysis for GasBuddy. "So there are fewer refineries producing this special blend of gasoline."

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California has an isolated refinery market. The special fuel blend that is consumed in California is produced by 11 major refineries within the state, according to the California Energy Commission.

"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 affairs specialist at AAA, told CNBC.

The isolated market means that any outages will lead to volatility in prices at the pump.

"Part of the reason why prices have been so high is that California has really restricted the ability for refineries to expand and grow," said De Haan. "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 plans to ban the sale of new gas-powered cars by 2035 as it transitions to cleaner vehicles. A quarter of new cars sold in California in 2023 were zero-emission vehicles, according to the California Energy Commission.

"The high price of gasoline does encourage more EV adoption," De Haan said. "Americans getting hit with $5 and $6 [per] gallon prices in California is likely accelerating the shift away."

In 2023, California Gov. Gavin Newsom signed a new law to combat alleged price gouging at the pump. The law aims to increase transparency in the oil and gas industry and created an independent watchdog called the Division of Petroleum Market Oversight.

"There hasn't really been much impact," De Haan said. "But I do believe that in the months ahead, there probably will be more ... talk on this subject."

Driving behaviors, smart shopping can cut fuel costs

Families are spending thousands of dollars on gasoline each year. In 2022, the average annual spending per consumer unit on gasoline and other fuels was $3,120, according to the Bureau of Labor Statistics. That tally was up 45.3% from 2021, as more people resumed commuting after the pandemic and fuel prices rose.

"Adopting new and improved driving behaviors can contribute to significant savings," Venegas said.

For drivers who aren't going electric, here are a few ways to save on gas, according to AAA:

  • Plan your route before you go
  • Don't drive aggressively

Watch the video above to learn more about what is driving gas prices higher and what drivers can do about it.

Why gas is so expensive in California (2024)


Why gas is so expensive in California? ›

"California has its own blend of gasoline, it has very high taxes, and it has a cap-and-trade program," De Haan said. "All of those factor into what you pay at the pump."

Why is the gas price in California so high? ›

California's gasoline has traditionally been more expensive than the rest of the country because of the state's special blend requirements, which are more costly to produce. California also imposes high taxes and fees associated with initiatives to reduce carbon emissions.

Why is gas bill high in California? ›

Factors that could impact your bill include the commodity cost of natural gas (also referred to as the “core procurement gas price”), seasonal variations, an increase in your natural gas appliance usage, weather conditions, and any remaining unpaid balance from prior bills.

Which state has the most expensive gas? ›

Most expensive US states for gas
  • California ($5.45)
  • Hawaii ($4.78)
  • Washington ($4.67)
  • Nevada ($4.63)
  • Oregon ($4.44)
  • Alaska ($4.37)
  • Arizona ($4.13)
  • Utah ($3.96)
Apr 22, 2024

Is there a new gas tax in California? ›

California's excise tax on gasoline will increase from 57.9 cents per gallon to 59.6 cents per gallon July 1, the California Department of Tax and Fee Administration announced via a notice to retailers. The excise tax on diesel fuel will increase from 44.1 cents per gallon to 45.4 cents per gallon.

Who controls gas prices in the USA? ›

Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.

How much is gas in LA right now? ›

Los Angeles-Long Beach
Current Avg.$4.917$5.295
Yesterday Avg.$4.934$5.309
Week Ago Avg.$5.034$5.398
Month Ago Avg.$5.305$5.664
1 more row

Where is gas cheapest in America? ›

Mississippi has the lowest price of gas, with an average of $3.00 per gallon of regular gas.

What state has the worst gas prices? ›

Data as of May 24, 2024. Western and Pacific states face the most costly gas in the nation, as the five states with the highest prices are California, Hawaii ($4.79), Washington ($4.57), Oregon ($4.33) and Nevada ($4.32).

What state has the cheapest cost of living? ›

To determine which states are the most affordable, the research team at USA TODAY Homefront looked at the cost of living by state. Utah came out on top as the most affordable state, thanks to manageable health care costs. On the other hand, the high homeownership costs landed New York as the least affordable state.

What makes up the cost of a gallon of gas in California? ›

In a May 2019 report exploring why California gasoline prices had soared to as much as $1.11 a gallon higher than the US average, six core reasons were given: (1) higher cost of producing compliant gasoline (19.6% of the difference), (2) higher fuel taxes (27.5%), (3) Cap & Trade costs (15.8%), (4) Low Carbon Fuel ...

How much is California state tax on a gallon of gas? ›

California pumps out the highest state gas tax rate of 77.9 cents per gallon (cpg), followed by Illinois (66.5 cpg) and Pennsylvania (62.2 cpg). The lowest state gas tax rates can be found in Alaska at 9.0 cents per gallon, followed by Missouri (17.5 cpg) and Mississippi (18.4 cpg).

How much is gas tax in California in 2024? ›

Motor Vehicle Fuel (Gasoline) Rates by Period
PeriodSales Tax Rate (plus applicable district taxes) Excludes Aviation GasolineExcise Tax Rate (per gallon) Excludes Aviation Gasoline
16 more rows

Why are gas prices higher in California than Texas? ›

The West Coast has notoriously high gas prices in part because the region is considered a fuel island. California is cut off by the Rockies mountain range from the oil market in the east. The state instead relies on international imports via the Panama Canal, which connects the Atlantic Ocean to the Pacific Ocean.

Why is California so expensive to live in? ›

It's not just housing that adds up – health care, taxes, food and transportation all contribute to California's growing cost of living.

Why did natural gas prices go up so much in California? ›

Low supply: Infrastructure repairs in Texas and high gasoline demand in Canada resulted in fewer imports to California, which gets almost 90% of its natural gas from out of state. Lower-than-normal stockpiles in Northern California reduced the available slack in the system.

Why is gas $6? ›

"If you ask the State of California, they'll say there's two reasons: one, there's maintenance issues going on in refineries in California, and two, the global price for oil is very expensive," said John Treanor, a AAA spokesperson.

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