California is one of the country’s most resource-rich states in the union. Wonderful year-round weather and the historic allure of the West have drawn millions of people to the Golden State. Despite the perfect combination of significant resources, a large workforce, and a practically state-wide perfect climate, California has succumbed to decades of bad policies that have made it one of the most expensive places to live in the United States.
One of the most evident examples of California’s higher cost of living is its infamously high gasoline prices.
As of early March, the average price of a gallon of gas in California is $4.67; the highest cost anywhere in the country, beating out even heavily isolated Hawaii. California’s high gas prices result from heavy taxes and fees, combined with a unique blend requirement that makes importing out-of-state refined petroleum nearly impossible. Not many out-of-state refineries are willing to produce the special blend, as it requires costly additional steps. The highest in the nation, California’s combined taxes add $0.90 per gallon, with $0.18 from federal taxes, $0.60 from a state excise tax, $0.10 from a sales tax, and $0.02 from a storage tank fee. However, California also imposes several “hidden taxes” on consumers that directly affect the price of gas. These hidden taxes take the form of environmental compliance costs, which add an estimated $0.54 per gallon; examples include California’s Low Carbon Fuel Standard and the state’s Cap-and-Invest Program, formerly Cap-and-Trade.
BELTWAY CONFIDENTIAL: CALIFORNIA DEMOCRATS WILL SPEND MILLIONS TO ‘STUDY’ INEVITABLE MILEAGE TAX
Complimenting the taxes and compliance costs for California’s gasoline is the high price that comes with refining crude in California. This cost has many causes, including the unique blend required by the California Air Resources Board and transportation. High transportation costs stem from California’s need to import a large share of its oil, as it generally doesn’t allow streamlined permitting or drilling. Additionally, government market manipulation through electric vehicle mandates and subsidies, and Assembly Bill 1 from 2024, which requires refineries to maintain a minimum inventory level, contributes to the egregious cost of doing business in a vilified industry within a generally unfriendly business climate.
All of these self-inflicted variables have led to the high gas prices that the brave Californians who have chosen to stay, endure. The unnecessarily high prices are evident when comparing the cost of a gallon of gas at some border gas stations with that at stations just across the Colorado River in Arizona. In the city of Blythe, California, the price of gasoline ranges from $4.90 at the low end to $5.20 at the high end, whereas in neighboring Ehrenberg, Arizona, a regular gallon of gas costs only $2.80. My current hometown of Yuma, Arizona, which also shares a border with California, further highlights this cost difference: Yuma’s gas generally costs $3.00 a gallon or less, while just across the border in California, it costs an astounding $5.80.
Arizona doesn’t necessarily have the lowest gas prices in the country; several states have average prices per gallon below $3.00, including Montana, Wyoming, North Carolina, and Ohio. However, given that Arizona imports both California’s unique blend and gasoline from Texas, the lower consumer cost in Arizona makes it clear that California’s high gas prices are self-inflicted and painfully unnecessary.
NEWSOM’S ENERGY POLICIES COULD JEOPARDIZE NATIONAL SECURITY, CALIFORNIA CONGRESSMAN WARNS
California is an example of what happens to a place that seemingly has it all but is entrusted to the political stewardship of arrogant ideologues. The ultimate cause of California’s high gas prices and overall outrageous cost of living is poor leadership, arrogance, and, quite possibly, political indifference. As an exiled Californian, it pains me to see the Golden State continue to plunge into political disarray.
Nowhere is this more evident than in the petroleum market, where aggressive, ill-conceived policies have led to the announced closures of refineries that can no longer simply pass on the high cost of doing business to consumers. Given the isolating nature of California’s energy sector, high gas prices, which are going to get even worse, are just one of the many cost-of-living factors that may drive others to unfortunately also become exiled Californians.
Caleb Jasso is a senior policy adviser at the Institute for Energy Research and a native of Glendora, California.
