The report from the Energy Policy Research Foundation highlights significant factors contributing to higher gasoline prices in California compared to the national average. Here's a breakdown:
1. Unique Gasoline Formulation: California mandates a special blend of gasoline called CARBOB, which adds about 16 cents per gallon due to stricter environmental regulations compared to federal standards. This blend can only be produced by in-state refineries or specially imported, limiting supply options.
2. Cap and Trade Program: Initiated in 2006, this program requires companies to buy allowances for greenhouse gas emissions, effectively increasing operational costs for oil refineries, which are then reflected in fuel prices. The impact of this policy has escalated over time.
3. Low Carbon Fuel Standard: Enacted in 2011, this standard focuses on reducing the carbon intensity of transportation fuels, further increasing the cost of gasoline as it mandates more expensive, lower-carbon alternatives or offsets.
4. Taxation: The state's excise tax on gasoline has risen from 18 cents per gallon in 2000 to 58 cents by 2024, directly affecting consumer prices.
5. Decrease in Refinery Numbers: The number of refineries in California has decreased significantly over the years, from 43 in 1982 to 14 in 2024. This reduction contributes to supply constraints, potentially leading to higher prices due to decreased competition and capacity.
6. Regulatory Environment: Governor Gavin Newsom and others have pointed to "Big Oil" for price gouging, proposing regulations like mandatory storage requirements for refineries. However, this has led to pushback, including from neighboring states, warning of potential supply shortages and further price hikes if such laws are enacted.
The combination of these policies and regulatory measures has resulted in a premium for Californians, peaking at an additional $1.91 per gallon over the national average at one point, and currently hovering around 90 cents per gallon. This situation underscores a complex interplay between environmental policy, economic regulation, and market dynamics, impacting everyday costs for consumers in California.
While Governor Newsom denies that state policies significantly contribute to these high gas prices, attributing them instead to oil company practices, the research suggests a direct link between state-specific environmental and regulatory policies and the elevated gasoline costs. This divergence in interpretation highlights ongoing debates about the balance between environmental goals, economic policy, and consumer affordability in California.
So Gavin, It's CLIMATE policies that are to blame. SHOCKER!