Why California gas prices keep rising despite a national drop

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As gas prices across the United States begin to show signs of decline, California finds itself bucking the trend with soaring costs at the pump. While the national average sees a decrease, the Golden State continues to set new records for gas prices, with the average cost of a gallon of regular unleaded surpassing $5.882 and hitting over $6 in the Los Angeles area, according to AAA.

So, why the disparity?

California’s perennially higher gas prices are primarily attributed to several factors, notably its elevated gas taxes and the expenses associated with regulatory initiatives aimed at curbing greenhouse gas emissions. However, the recent surge in prices cannot be solely explained by these long-standing factors. Despite a drop in the price of crude oil since late February, California’s gas prices persist in their upward trajectory.

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According to Severin Borenstein, an economist at the University of California, Berkeley, the anomaly in California’s gas prices is likely linked to disruptions in the state’s gasoline supply chain. California’s unique regulatory requirements mandate a specialized, cleaner fuel blend, leading to a higher cost of production. While the typical price differential between California-bound fuel and that of other states is around 10 cents per gallon, recent weeks have seen a stark increase, with the price gap ballooning to 80 to 90 cents.

Borenstein posits that an unidentified issue within the refinery sector is to blame for the production squeeze, resulting in the inflated costs of California-blend gasoline. Although the exact source of the production bottleneck remains unclear, recent labor strikes at a Chevron Corp. refinery in Richmond have exacerbated concerns.

Despite the political attention garnered by the escalating gasoline costs, potential relief measures remain uncertain. Governor Gavin Newsom’s $9 billion proposal to issue $400 debit cards to registered vehicle owners aims to alleviate the burden, with individuals eligible for up to $800 for two cars. Additionally, proposals to halt scheduled gas tax increases and provide rebates to households have been floated by both Republican and Democratic leaders.

As Californians grapple with the prospect of continued price hikes at the pump, the need for solutions grows more urgent. While increased imports could help address the shortage of California-blend gasoline, consumers’ tendencies to opt for convenience over cost-consciousness may further impede efforts to lower prices. With the duration of the price surge uncertain, Californians face an uncertain road ahead as they navigate the challenges posed by relentless gas price increases.