CA's 'Unheard Of' Gas Prices Spike Again: 5 Things To Know

CALIFORNIA — Gas prices in California are catapulting to record highs again, despite a months-long reprieve. This time, prices for regular gas are nearly $3 per gallon above the national average.

The national average price for a gallon of regular gas on Wednesday was $3.83, while California's was $6.42. This is "almost unheard of," Marie Montgomery, a spokesperson for Automobile Club of Southern California told Patch.

The Golden State has been experiencing a new record price almost every day. The last week in September saw prices skyrocketing 10 to 15 cents on several days.

Here are five things to know about the gas crisis in California.

1. A High Gas Tax Equals High Gas Prices

Higher taxes in California may be mostly to blame for the state's extreme prices, Montgomery said.

"California gas prices in general are much higher than the national average and are usually the most expensive or second-most expensive in the country because of having the highest gas taxes in the US, an overall higher cost of living in the state," she said.

The state has the highest excise tax rate of .53 cents per gallon, according to a 2022 report from IGEN tax.

Gov. Gavin Newsom on Friday announced that oil refineries could start selling winter-blend gas to ease sky-high prices, but the order may have little immediate effect, said Kara Greene, a spokeswoman for the Western States Petroleum Association. If Newsom truly wanted to lower prices, he could suspend the state's gas tax or relax other regulations, she said.

2. A Shortage Triggered Higher Prices

California experienced a fuel supply crisis in September after many of its refineries deferred maintenance that would normally have happened earlier in the year to stay open as gas prices reached record levels after Russia-Ukraine war erupted, Montgomery explained.

"They then had to cut production for maintenance in September and there were some that had to do unplanned maintenance, creating an unexpected shortage of the state’s 'summer blend' of gasoline a couple months before the state’s gas stations would normally be allowed to sell 'winter blend' gasoline," she said.

The shortage pushed prices up as much as 10-15 cents a day in the last week of September.

3. Prices Are Expected To Fall As Newsom Relaxes Refinery Rules

Newsom on Friday announced that oil refineries could start selling more polluting winter-blend gasoline ahead of schedule to ease soaring fuel prices.

"This will take days or maybe a week or two to accomplish logistically, but once the state’s gas stations begin receiving winter blend shipments, in theory the prices should stop dropping both because that blend is cheaper to produce," Montgomery said.

The move directly contradicts his own goals for reducing climate pollutants, but it will certainly knock down prices.

On Wednesday, wholesale gas prices in Los Angeles collapsed to level below what they were when price increases kicked off in September, according to Montgomery.

"If this trend continues in the next few days, we expect pump prices to reverse course and begin dropping pretty quickly," she said.

4. Newsom Lambasts The Oil Industry

On Friday, Gov. Gavin Newsom called on state lawmakers to pass a new tax on oil company profits and return the money to California taxpayers.

"They're ripping you off," he said of the oil industry.

But oil industry representatives countered that it is state regulations that push state prices higher than the rest of the nation.

It's the latest spat between Newsom and the oil industry, which holds political and economic sway in California despite the state's aggressive climate policies. But Newsom's dual actions Friday also illustrate the complicated reality Newsom faces as he tries to wean the state off oil and gas while responding to economic reality.

Earlier this year, for example, Newsom's administration turned to generators and power plants that run on fossil fuels to help avoid rolling power blackouts during a heat wave.

By urging air regulators to let oil companies switch to a winter blend earlier, Newsom is acknowledging that state rules play a role in prices, said Kara Greene, a spokeswoman for the Western States Petroleum Association.

5. Could Gas Prices Reach A Dreaded $7?

Switching from the summer to winter blend would likely save consumers 15 to 20 cents per gallon, said Doug Shupe, a spokesman for the Southern California Automobile Club.

Gas prices in Los Angeles have already broken a record of $6.46 set in June. On Wednesday, the average price of a regular gallon of gasoline was $6.49.

“If these prices go up to $7 a gallon, a 15-cent drop is not really going to mean much to drivers,” Shupe said.

But Montgomery said Californians aren't likely to see the average price rise to the $7 mark anytime soon.

"...it seems like all signs are pointing to a sizable price decrease," she said.