Many factors impact the cost of gasoline in the state.
The government collects a lot
According to the California Energy Commission, in July this year government taxes and fees cost 9 times more than what oil companies made in net profits.
The California Government Collected
The Federal Government Collected
Oil Companies Profited
SOURCE: Volume-Weighted Gasoline Refining Margin, California Energy Commission, July 2023
There are many taxes and fees
In July, the $1.26 per gallon in government taxes and fees broke down like this:
SOURCE: California Energy Commission, OPIS West Coast Spot Market Report
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.
I’m not sure I understand the argument for a windfall profits tax on energy companies. If you reduce profitability, you will discourage investment, which is the opposite of our objectives.
– Lawrence H. Summers, former US Secretary of the Treasury