California gas prices

Discussion I had with a friend recently... California gas prices have hit $7/gallon in some places, even as high as almost $8 at at least one station. Growing up in the 90s, gas in the midwest was generally under $1.00/gallon, often as low as $.79/gallon. Pretty much the only way I was able to stay flush delivering Chinese food, when a $5 tip was memorable. But I digress.

Even in SoCal, gas dipped below $1.00/gallon as recently as as 1998, only to surge to around $2.00/gallon by sprsurge to around $2.00/gallon by spring of 2000. Outside of like a global pandemic, they’ve never gone back down, really, though they’ve occasionally shot up much higher. June 2008 or so, adjusted for inflation, gas prices were in the $6-7 range in California.

But why? I find this interesting; how little things have changed, despite multiple governors (including – ostensibly – a Republican, Arnold Schwarzenegger, from 2003–2011):

California Attorney General Bill Lockyear investigated accusations of price-fixing among California's oil producers. He didn't find any. But his report cited three major factors in the state's consistently high gasoline prices.

• Lack of competition.
• The state's requirement for cleaner-burning gasoline.
• Taxes. California has the highest gas taxes in the country.

[Professor Severin] Borenstein [of UC Berkeley’s Energy Institute] says it also has too few refiners.

“There are only six producers, who produce a vast majority of the product we consume in California, and that ... reduced competition has led to exacerbation of the price spikes.”

How did gas get to be $2 a gallon? (CNN, March 15, 2000.)

All those factors are still in play, and in fact getting worse.  (Edit: I wrote this before seeing this piece: Is California at risk of a gasoline shortage amid the Iran war? Experts explain (ABC News, May 6, 2026): “Fuel prices in California typically run higher than other states, even in the best of times. That usual price disparity stems from regulations and taxes imposed in the Golden State, among other factors.”)

California Blend. California requires California Reformulated Gasoline Blendstock for Oxygenate Blending (“CARBOB”). Most of that has historically been produced in California’s refineries. California is a “fuel island,” with no pipelines, so even when other refineries produce the “California Blend” it can take weeks to arrive, offering little to no ameliorative effect on sudden spikes caused by, e.g., refinery accidents. The California-specific requirement dates back to the early 1990s, and seems to have had the desired effect. I remember “smog warning days” when it wasn’t safe to go outside, as recently as 1995-1996; those fell off dramatically in the 90s. (I remember we used to joke about the deal with the devil the University had, where the mountains would be crystal clear in the distance during family week, but as soon as the parents were gone, the wall of brown smog descended, blocking those views.)

Anyway. Specialty gas, mostly made in California.

Refinery capacity. Meanwhile, California has been shedding refineries. There were thirty (30) in 1990, twenty-three (23) in 2000, 18 in 2010, and in 2025 just 13 remaining. The top four (4) refineries control somewhere between 90-98% of all California gasoline refining. (That “lack of competition” Lockyear identified.) Meanwhile, production has also decreased, about 14% from 2020 to 2025, to about 1M BPD (~42M gallons/day).

Excise Taxes. In 2017, California bait-and-switched voters with the 2017 Road Repair and Accountability Act (SB 1), which immediately added 12¢/gal in new taxes, which gets adjusted based on the CPI annually. Excise taxes are currently 61.2¢/gal. In 2023, Californians for Affordable and Reliable Energy ran billboards pointing out that 49 states average $.29/gallon in taxes, while California (then) was $1.08.

So, yeah, we have a sort of perfect storm of our special blend, limited (and dropping) refinery capacity, and high taxes. Cool.

Getting an EV about 18 months ago seems to have been astonishingly prescient, especially now, when even folks outside California are feeling the pinch: Americans Spent $125 Million More on Gas Friday Than They Did a Week Ago (WSJ, May 1, 2026).

Solterra EV owner smugly aloof from the pain at the pump

¹ Criticism hounds Gov. Gavin Newsom over his plans for California gas tax dollars (LA Times, Oct. 15, 2019): SB 1 was sold as an increase necessary to fix potholes and strengthen bridges, but of the revenue generated, “20% was dedicated for rail and mass transit, and the law specifies that $100 million annually will be used to build more bike paths, crosswalks and sidewalks...”