Facts per Gallon

Why is gas
more expensive
in California?

Many factors impact the cost
of gasoline in the state.

Mandated Low Carbon Fuel Requirements

The California Legislature and Governor have given authority to state regulators to mandate requirements on gas designed to lower its carbon intensity. According to the California Air Resources Board (CARB), California’s unique gas adds 11 cents to every gallon sold. And by 2025, CARB expects that cost will increase to 47 cents per gallon.
SOURCE: State of California Air Resources Board Standardized Regulatory Impact Assessment, Sept. 8, 2023

Costly Cap-and-Trade

“Cap and Trade” is California’s market-based program to place a cost on emitting carbon. That higher cost is intended to incentivize industry to find the most cost-effective and technologically feasible ways to reduce greenhouse gas emissions to meet the state’s climate goals. This program adds 30 cents per gallon with that cost set to dramatically increase by 2025.
SOURCE: California Energy Commission, OPIS West Coast Spot Market Report, Effective as of 6 November 2023

The government collects a lot

According to the California Energy Commission, in November of this year, government taxes and fees cost 9 times more than what oil companies made in net profits.

The California
Government Collected

$1.08

PER GALLON

The Federal
Government Collected

$0.18

PER GALLON

Oil Companies
Profited

$0.14

PER GALLON

SOURCE: California Energy Commission, OPIS West Coast Spot Market Report, November, 2023

There are many taxes and fees

In November, the $1.30 per gallon in government taxes and fees broke down like this:
SOURCE: California Energy Commission, OPIS West Coast Spot Market Report, November 2023

Gas shortages and even higher
prices could come soon

The Legislature and Governor passed a new law last year that empowers regulators to set a windfall cap on oil industry profits. The California Energy Commission has begun the work to set that cap. But economists warn this could lead to gas shortages and higher prices.
SOURCE: Professor Michael Mische, USC Marshall School of Business, Report: California’s Profit Gouging Tax, 2023

The Bottom Line: California policies keep adding
to the price of gasoline.