Oil prices have risen above $90 a barrel for the first time in over a year. That number was $67 in March, which means the run-up since then is 34%. At the same time, the 10.9% increase in gasoline prices in August compared to July was the highest rate of all items in the consumer price index. Gas nationwide is moving toward $4 a gallon. It is well above $5 in California, which is terrible news for consumers there. The number now is $5.48. (These are the most fuel-efficient new SUVs.)
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California suffers from several problems that push gas prices higher. One is that the state is not near most of the county’s huge refineries. Only one refinery in the state, the Los Angeles Refinery, owned by Marathon Petroleum, is in the top ten nationwide in terms of output.

California also has the highest gas tax per gallon. That figure is $0.651. The national average is $0.317 per gallon.

Because California has the largest population among all states, at over 36 million, it has an outsized influence on tax prices nationwide. The United States has a total population of 335 million.

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High gas prices have a harmful effect on most people, particularly those with low household incomes or who regularly travel long distances. Household budgets usually are composed primarily of food, fuel, housing, taxes and clothing. When the cost of one of these soars, the damage can be profound. Gas prices above $5 can be crippling and completely undermine discretionary spending, which is at the heart of the U.S. economy.

The entire nation faces much higher gas prices. Several investment banks report they believe per-gallon gas prices will rise above $5. At that point, the nation’s economy will have trouble.

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