Gasoline prices in California are approaching the $5 per gallon level. That was the price nationwide at the start of the Russian invasion of Ukraine in mid-2022. At that point, oil moved to over $100 a barrel on interrupted supply. However, despite a plentiful supply of crude today, which has lowered the price of gasoline nationwide, current prices in California are uniquely high due to state taxes and transportation costs.
At $4.50 a gallon and even higher in some California cities, including San Francisco and San Diego, the price is 43% higher than the national number of $3.13, according to the AAA.
State and local taxes affect gas prices. In California, federal and state taxes total $0.87 per gallon. That compares to a national figure of $0.57. States near the Gulf of Mexico refineries close to Houston pay much less. In Texas, the figure is $0.384.
Gas prices are usually tethered to the price of oil, but aside from crude prices, California has mandated that cars use a special grade of gasoline, known as summer gas, due to emission rules. It may be why electric vehicles (EVs) sell so well there. California has 3,026 EVs per 100,000 people, which is by far the highest rate in the nation.
Gas prices also have a significant effect on the economy, particularly for people who drive long distances. These prices eat into disposable income, which is among the drivers of gross domestic product. Fuel Logic made this point about the effect on the economy: “As gas prices hike, the cost of daily travel, including commuting and household expenses rises, leaving less money for groceries, utilities, and savings.”
The drag on income will stay higher in California than in any other state. Refinery needs and taxes make that certain.
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