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Demosthenes's avatar

Why are gas prices in California way higher than the rest of the country?

Asked by Demosthenes (14470points) 1 month ago

California’s gas prices are always higher than the national average due to state taxes and regulations, but currently California’s gas is almost $3 more than the national average, which is the largest gap in history.

All I can get out of news articles as to why it is so much higher than it should be is “we don’t know” and “it’s a mystery” and caution against blaming oil companies. After all, their pricing strategies are “shrouded in secrecy”, according to the San Jose Mercury. So what is the actual reason? I know we have a lot of California residents here, so what is your opinion on this?

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24 Answers

hat's avatar

Isn’t it a combo of larger excise tax ($0.539 per gallon) and the fact that CA requires a different blend of gasoline?

janbb's avatar

I always understood it to be that California state taxes were higher on gas.

Jonsblond's avatar

Higher demand because of the large population of the state?

Entropy's avatar

Gas taxes, environmental air quality rules that require a custom blend of gas. The blend issue is a bigger deal than most people think. Different states and regions have different rules that they or the EPA put in place. The EPA’s rules vary by season and part of the country.

Not all refineries are set up to produce all blends. It isn’t like you make a batch blended for region X and then flip a switch and make one for region Y. It can require a considerable retasking. This can mean some regions/states/countries might only have one or two refineries servicing them. I don’t know California’s relationship with refineries but they are famous for having tighter air quality rules than most states.

This can make it difficult to surge supply when demand rises. Or conversely, it can leave one vulnerable when a refinery experiences a disruption.

Demosthenes's avatar

I really have no idea, so I’m open to any explanations here.

To be clear though (and I should’ve worded it better), I’m asking about the current September/October 2022 rise in gas prices. I know why California’s gas is more expensive in general, but the difference between California prices and the national average is the greatest in U.S. history as of this month and I don’t know why. Gas prices were up across the nation in June, and California’s were high as a result. But now that the national average is down, California’s gas prices continue to rise out of pace with the rest of the nation.

Nevada is also seeing high prices, second only to California. Alaska and Hawaii are always high compared to the national average, but one can blame their remoteness for the price.

JLeslie's avatar

@hat has the answer I would give.

I would add because they can. Californians continue to pay the prices so why not? Capitalism.

zenvelo's avatar

Currently, four refineries in California are off line for reformulation. That means the supply is low and the oil companies raise prices to slow demand.

Also, the oil companies found out earlier this year that gasoline demand is much more inelastic than previously thought, and they could raise prices fairly higher and the higher margin would outpace the small reduction in consumption, thus generating more profits for the oil companies. The combined profits of the largest energy companies in the first quarter of this year are close to $100 billion.

Blackberry's avatar

Because it’s a landmass that takes up over half the entire west coast and is one of the best places to live on the entire planet?

This is like asking why rent is higher in NYC and LA lol.

kritiper's avatar

High road use taxes. (My guess.)

jca2's avatar

I’m paying about $2.95 a gallon in CT and a friend who lives in the middle of CA tells me he’s paying $6.50 a gallon. That’s a little nuts.

SnipSnip's avatar

More and higher taxes.

JLeslie's avatar

California wants to discourage gas cars and encourage electric cars. High gas prices encourage people to buy electric cars.

janbb's avatar

@JLeslie But prices have been higher in Cal for years.

JLeslie's avatar

@janbb Yes, but it seems even more extreme now.

Blackwater_Park's avatar

@hat is correct, it’s the blend, the taxes and also the distribution costs which are different than eastern states that have pipelines from the Gulf. There are also less suppliers of California’s particular gas blend.

Demosthenes's avatar

What’s the reason for Nevada having the second highest prices in the country? I can’t imagine its proximity to California is unrelated…

Jonsblond's avatar

^the mob

I’m kind of joking.

cheebdragon's avatar

Personally, I think it has more to do with the inflation relief $$$ going out this week.

zenvelo's avatar

@Demosthenes Much of Nevada depends on product from California refiners. So when refiners raise prices in California, it affects prices in Nevada too.

@JLeslie “High gasoline prices” is not a policy initiative of the State of California.

SnipSnip's avatar

To confuse people. Looks like it worked.

jca2's avatar

My friend who lives there says it’s a combo of high taxes (over a dollar per gallon) and the special blend that California requires. He said the blend is not good for your car, ironically, but it’s good for the environment.

Demosthenes's avatar

@cheebdragon Maybe. Thanks for being the only one to address the current fall 2022 rise in prices. Again, I know why California gas is more expensive in general.

@zenvelo Thanks.

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