Reminder: California’s High Gas Prices are Because of Bad Policy

With Americans still feeling the pressure of inflation, high prices at the gas pump have become even more devastating.  Despite being the seventh largest producer of crude oil in the United States, California boasts the second-highest average cost per gallon of gas in the nation.  Additionally, in a petition from the American Petroleum Institute sent to the Supreme Court in 2023, which asked to overturn the overshore fracking moratorium, it was estimated that there are 10 billion barrels of oil and 16 trillion cubic feet of untapped natural gas of the coast of California, showing that high gas prices are not an availability problem, but a regulatory one.  Not only does California have heavy restrictions on resource extraction, but a primary culprit of the unnecessary higher cost of gas in the state comes from a combination of taxes and fees.

For every gallon of gas a consumer purchases in the golden state, they also pay the below taxes and fees (as of August 15th, 2024):

• Cap and Trade: $0.31
• State Underground Storage Fee: $0.02
• Low Carbon Fuel Standard: $0.09
• Federal Excise Tax: $0.18
• State & Local Sales Tax: $0.11
• State Excise Tax: $0.59

These taxes and fees add $1.30 for every gallon of gas purchased in California, placing the average cost of gas in the state at $4.60, which is $1.19 higher than the current national average of $3.41.  Not only do these taxes and fees add significantly to the cost of gas for consumers in California, but given that their intended purpose is to fund road and transportation projects, even though California has some of the worst roads in the country, it seems as though residents of the Golden State are left with high prices at the pump, and little to show for it in the form of a public return on their investment.