Many factors affect gasoline prices, including crude oil cost, refinery cost and profits, distribution cost, marketing costs, and profits. In California, there are five reasons why retail gasoline prices are higher than the average price in the United States:
- Higher Taxes on Gasoline
State and local sales taxes, combined with the state excise tax, account for the difference between California and the U.S. average.
- Higher Gasoline Production Costs
California's unique, cleaner-burning gasoline blend specification costs more to produce than other types of gasoline, typically amounting to a 10-to-15 cents per gallon price difference between California and the U.S. average.
- Environmental Program Costs
California is a world leader in its efforts to fight climate change. The state’s higher air quality standards than elsewhere in the U.S. are designed to protect the health and environment from the harmful effects of air pollution.
- California’s Shorter Winter Season
Summer-blend gasoline evaporates at a higher temperature than winter-blend gasoline, meaning it is less likely to contribute to unhealthy ozone and smog levels. Summer-blend gasoline is also more expensive to produce. As a result of California’s warmer climate, the state uses summer-blend gasoline for a longer period during the year than elsewhere in the nation.
- Isolated Nature of the California Fuels Market
Under normal conditions, California refiners produce enough gasoline to meet demand inside the state. California refineries also export gasoline. When needed, the state typically imports gasoline via marine shipments, which usually take three to four weeks to deliver. The state’s prices must rise to secure these international imports via marine vessel to cover the additional delivery costs.
As a result of the state’s isolated fuels market, unplanned refinery outages requiring maintenance can significantly impact the state’s gasoline supply, usually resulting in temporary price spikes.
- The California Department of Conservation’s Geologic Energy Management Division (CalGEM) regulates the drilling, operation, and closure of oil, natural gas, and geothermal wells.
- The U.S. Energy Information Administration (EIA) collects, analyzes, and disseminates independent and impartial energy information. Petroleum prices, production and use statistics, and analysis can be found on the Petroleum and Other Liquids page.
- AAA has current gasoline prices in each state.