As the price of oil lurches between $40 and $45, depending on rumors from the Middle East, Nigeria and the United States, the price of a regular gallon of gasoline has neared $3 in some California cities, well above the national price of $2.15.

The current average price in San Francisco is $2.95, in Santa Barbara $2.90, in Ventura at $2.84, in Los Angeles and San Diego $2.83, according to GasBuddy. This area of California has 20 million people, which makes it nearly 6% of the U.S. population.

It will not take much to push gas prices in these cities over $3. Some experts believe there is an oversupply. Others have taken the opposite side of the argument. According to Oilprice.com, data on oil and gas supplies is scarce and often inaccurate. Any window on undersupply could drive prices higher.

The latest example of spotty data is the situation in Nigeria. Have rebels cut several important oil pipes, or does the government have this under control? Each side has a different story, and both could be wrong.

Incidentally, California gas prices have upward pressure no matter what the state of oil is. The gas tax in California is the fifth highest in the nation at $0.57 per gallon. The national average is $0.48, and the lowest is in Alaska at $0.32. Consider where California gas prices would sit on the state price spectrum if its tax was $0.25 a gallon lower?

For the time being, factors outside taxes should keep the price of the average gallon of regular in California around $3. However, oil was above $90 just a year and a half ago. Tension in the Middle East, problems in Nigeria, further financial problems with U.S. frackers. Not entirely unlikely.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.