As Memorial Day approaches and Americans take their long-weekend driving getaways, California’s price of gasoline remains stubbornly high—$4.92 per gallon compared to a national average of $3.19, per AAA. By next year, however, drivers might look back at those prices with envy. Most energy experts predict that California gas prices are likely to go way up.
It doesn’t take any complex research to arrive at that conclusion. “California could lose about 20% of its oil refining capacity in 12 months—with potentially significant implications for prices at the pump,” the San Francisco Chronicle reported last month. The story refers, of course, to Phillips 66’s decision to shutter its Los Angeles refinery and Valero’s likely decision to by April 2026 close a refinery in Benicia, northeast of San Francisco.
Valero officials were straightforward about their rationale. “California has been pursuing policies to move away from fossil fuels for the past 20 years, and the consequence of that is the regulatory and enforcement environment is the most stringent and difficult of anywhere else in North America,” said Valero CEO Lane Riggs. So while California’s demand for gasoline has dropped slightly, it’s already tight supplies are about to take a big hit.
This is so infuriating because it’s the direct result of the state’s policies. Riggs echoed a point we often make on these editorial pages. The state’s high prices aren’t just a result of our nationally high gas taxes. They are due to a policy that’s designed to drive fossil fuels out of the state. No sensible company would invest in new refinery capacity in a state that wants them to leave—as evidenced by escalating regulations and official rhetoric.
California is essentially an energy island. Because of a state-required special-fuels formulation that’s designed to reduce pollution, California gets 90% of its gasoline from in-state refineries. We can’t just import more from Nevada or Texas when refineries shutter. Overseas product can help fill the gap, but that’s pricey because of shipping costs. Lawmakers passed and endorse these policies.
In response to the refinery news, Gov. Gavin Newsom sent a letter to the California Energy Commission stating, “I am directing you … to reinforce the state’s openness to a collaborative relationship and our firm belief that Californians can be protected from price spikes and refiners can profitably operate in California—a market where demand for gasoline will still exist for years to come.”
That should evoke some guffaws. Newsom has constantly blasted the industry for its “greed.” He held an emergency legislative session to trumpet allegations of price gouging. The governor and attorney general continue to sue and hector the fossil-fuel industry. And now, facing the fruits of his own decisions, the governor suddenly is concerned about building a “collaborative relationship.” That’s almost embarrassing.
We know the reason for California’s high gas prices. Research last month from the USC Marshall School of Business found that “California has the highest tax, regulatory fees and cost burden per gallon of gasoline in the U.S.”
Furthermore, the California Air Resources Board already is on track to impose a low-carbon fuel standard that will further hike prices—something that started well before the latest refinery announcements. It’s time for the governor and Legislature to adjust their policies accordingly.
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