California gas prices are already significantly higher than the national average.
California’s new legislative actions and regulatory decisions will cost consumers hundreds of extra dollars per year if they own a gas powered car, according to a new estimate.
California’s new special blend mandates for refiners and gas stations, and legislation requiring refineries to maintain minimum amounts of gasoline will contribute to higher gas prices costing consumers anywhere from $222 to $449 annually, according to Michael Mische, a professor at the University of Southern California’s business school.
“California regulatory and legislative actions could conservatively cost the California consumer an extra $222.00 to $449.00 a year for regular grade fuel, more for premium,” Mische said.
“To compensate for the expected increases in retail gasoline prices, the average Californian driving an internal combustion vehicle will have to earn an additional $600.00 to $1,000.00 a year in pre-tax income to ‘break even’ with 2024 prices, depending on the grade of gas they purchase.”
Mische is a longtime academic and consultant who has worked for the Saudi government on its “Innovation Super Highway” initiative and public investment fund. He has also consulted for the U.S. government and several Fortune 500 corporations.
The California Air Resources Board amended its Low Carbon Fuel Standard program earlier this month to mandate the production and sale of special-blend gasoline to allow the state to reach its carbon-emissions targets.
A study from the University of Pennsylvania’s Kleinman Center found that the CARB underestimated the impact the new fuel standards would have on gas prices. The Kleinman Center expects the price of gas to increase 65 cents per gallon in 2025, 18 cents more than the CARB estimate.
Mische’s estimate also takes into consideration a law California recently passed instructing oil refiners to maintain a minimum level of reserves, a bill that opponents warned could lead to increased gas prices and potential shortages. Immediately after the bill passed, Phillips 66 announced its plan to close its Los Angeles refinery by the end of 2025, a third factor Mische’s estimate evaluates. Lastly, he projects a slight increase in California’s excise tax for gas,
“It should be clear to everyone that the California government is more interested in climate politics than improving the general welfare of its citizens. Governor Newsom would rather gouge people’s gas prices than improve their standard of living,” said Steve Milloy, senior E&E legal institute fellow, in a statement shared with NR.
Gas prices in California are $4.44 a gallon, $1.38 per gallon higher than the national average, according to the American Automobile Association. The California average is down noticeably from two years ago when the U.S. experienced inflation rates unseen in decades and gas prices nationwide experienced a surge.
President-elect Donald Trump’s energy policy team is expected to reverse the Biden administration’s stringent federal regulations on gas-powered cars and tax incentives for electric vehicle purchases. California governor Gavin Newsom (D) is promising to take the opposite approach, offering consumers a rebate if the incoming presidential administration follows through on Trump’s promises.